Today sees the publication of the fourth Permanent TSB/ESRI QUARTERLY House Price Index. The index for Quarter Four (Q4) of 2010 tells us that the price of residential property has fallen nationally by 3.5% during the quarter. An average property now costs €191,776 nationally compared with €198,689 at the end of September 2010. In my view you should treat the PTSB/ESRI series with much caution as PTSB has less than 5% of the mortgage market, cash sales are ignored and the transaction level is unknown but believed to be shallow. I must also admit to being curious about the claim that prices nationally fell 3.5% but in the two component regions, prices fell by 0.6% in Dublin and 2.9% outside Dublin.
In % terms the indication is that the pace of price falls is picking up outside Dublin but within Dublin itself prices fell by the lowest % since the bubble burst and the decline started in the capital in April 2007.
The National House Price index stood at 85.2 at the end of December 2010 with the average cost of a home being €191,776 (compared with €198,689 at the end of Q3, 2010). The last time it was at this level was in April, 2002.
The Dublin House Price index stood at 78.6 at the end of December 2010 with the average cost of a home in the capital being €237,480 (compared with €238,986 at the end of Q3, 2010). The last time it was at this level was in March, 2002.
The Outside Dublin House Price index stood at 91.3 at the end of December 2010 with the average cost of a home being €174,570 (compared with €179,721 at the end of Q3, 2010). The last time it was at this level was in August, 2002.
So the key questions : are prices still falling? We don’t know the breakdown of the quarterly fall by month but it is certainly the case that prices have continued to fall on a quarterly basis since September 2010 and the rate of fall between Jul-Sep 2010 (quarter) was 1.3% compared with a fall between Oct-Dec 2010 (quarter) of 3.5%, so the pace of falls is picking up again though the headline will probably be that Dublin is stabilising.
How far off the peak are we? The national peak according to ESRI was in January/February 2007 when the index for both months stood at 139.5. Today’s figure of 85.2 for December 2010 indicates that prices have dropped by 38.9% from the peak. In Dublin, prices are 44.9% off the peak while Outside Dublin prices are 34.9% off the peak.
How much further will prices drop? Who knows, but here are the latest predictions and projections for residential property in the State – the spreadsheet with the sources for the data is here.
What does the index mean for NAMA? NAMA has chosen a valuation date of 30th November 2009 to value the Current Market Value of property. The NAMA Long-term Economic Value Regulations state that evidence produced after 10th January 2010 by the ESRI is not to be considered when evaluating future conditions in which the long term value of the property will be calculated. The latest figures show residential property has fallen by 14.1% from 30th November 2009 to 31st December, 2010. The PTSB property price series is the source for the Irish residential data in the key property market data at the top of this page. The NWL index is now at 893 which means that NAMA needs to see a blended increase of 12.0% in property prices across its portfolio to break even at a gross profit level (taking into account the fact that subordinated bonds will not need be honoured if NAMA makes a loss).
NAMA Wine Lake 