House prices 'have hit bottom and will stay there for years'

PROPERTY prices have hit rock bottom -- but could stay there for years, according to a new report.

The average price of houses and apartments is now as low as 1,000  the report claims.

This is just a third of the average price properties sold for during the boom.

Prices have fallen so far in the last five years that it now takes less than three times the income of a single person to buy a property.

But now that they have reached a floor, prices may stay at their current level for ages, the report from Goodbody Stockbrokers says.

The report makes it clear that this is due to the current mortgage lending famine.

The study by economist Dermot O'Leary found prices have now fallen 68% from the peak in 2007.

These are based on the prices reached on the Allsop Space distressed property auctions which have drawn a lot of interest.

Mr O'Leary said this fall was far greater than the 48% recorded by the official Central Statistics Office (CSO) property price index.

His report contends that the prices achieved in the Allsop auctions more accurately reflected what was really happening in the market.

This is because the CSO figures do not take account of cash purchases, which account for up to a third of sales.

The lack of up-to-date data was contributing to the length of the house-price crash, he said.

"Allied to tight credit conditions, housing oversupply and a weak domestic demand environment, the lack of transparency on sales prices in the Irish residential property market has contributed to the prolonged nature of the Irish housing market crash," he said.

The report said that mortgage lending last year was back to levels last seen in 1971, adding that a key ingredient for any recovery in the property market was credit availability .

Mr O'Leary said prices had now hit the bottom.

"While it would be our contention that prices are undershooting due to lack of access to credit and a weak domestic economy, this analysis suggests that residential property, at 60%-plus from peak, is now transacting for prices very close to, or at, fair value," he said.

However, he said that the mortgage market was set to "remain moribund for a significant further period of time".

Mr O'Leary said a lack of mortgage lending was hurting the market.

For help and full relief from these problems, contact   www.RealEstateRelief.org