The collapse in the Irish property market is not over with prices expected to fall by up to 70% from the house price bubble peak before they bottom out, according to a report from Davy Stockbrokers today.
The analysts collated data from the two Allsop property auctions held this year, which they said indicate that prices are currently down 60.2% from the peak of the market.
"This evidence is consistent with our recent house price report, Irish housing market - 'Affordability returns to sustainable levels, but credit constraints and uncertainty point to further declines,' in which we set out our view that prices will eventually trough 65-70% from peak," the report said.
Davy Research said they still expect Irish house prices to undershoot long-term sustainable levels due to uncertainty and constrained credit availability.
It added that there is now additional evidence that the CSO index understates true declines in the Irish property market.
"The CSO index omits cash purchases and may not capture sufficient transactions in rural areas. The majority of purchasers in Allsop auctions (72% up to March) are cash buyers, and auction data may be a more timely indication of market prices. The Allsop data indicates that properties outside Dublin are transacting well beyond 60% price declines," it said.
"But credit conditions will limit any recovery. With just €2.4bn of mortgage lending in 2011, a fall from the peak of €39bn, credit remains constrained. Restricted credit availability for first-time buyers and movers is preventing these investors from taking advantage of attractive rental yields," it said.