For quite some time people (myself included) have been saying that we will start to see a two tier market, one in cities and another everywhere else. The most recent CSO figures on house prices seem to indicate that this may be the case because while prices fell 1.1% nationally, the same didn't occur in Dublin (which is the only city separated out from the rest of the statistics).
In Dublin house prices are down 55% and apartments by 60% - a recent Central Bank report indicated that this implies an over-correction of between 12% and 26% which also mentions that in a significant 'bust' that often prices over correct by up to 35%.
Of course, there are mortgage arrears, only today the Central Bank has release new figures showing that 77,630 accounts are more than 90 days behind, banks claim to be lending but the most recent Irish Bankers Federations numbers only reinforce what everybody is saying (that they aren't), and with 2011 having been a 40 year low in lending the anaemic start to 2012 doesn't bode well.
People also mention NAMA and the stock they are holding (c. 14,000) of which almost 30% are not completed but will be and the rest are either rented out or sold, this is not enough to 'sway the market' – as long as it isn't all offered for sale on the same day.
And while credit is down property prices are not falling in Dublin, the higher participation of cash buyers (some say up to one third) could be a factor, people deciding to hold out and not sell may also be having an effect – a recent study stated that at least 34% of households have no mortgage.
Realising the end of a downturn will only come after the market has already turned, the hard thing is to know whether that is a live event happening now or if the current prices in Dublin are merely a temporary reprieve?
So is this a divided market? Are we getting near a bottom? If we were to follow international examples (the exception being Japan) then these are all tentative signs of a levelling off, what do you think? Have your own say....
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