ADVICE: Alan Bridle, Bank of Ireland economist
Looking through the lens as an economist, I see a residential market that is in transition to affordable housing and the journey is not yet complete.
I would expect average prices to tumble further towards the 200,000 mark and possibly below that over the next six to 12 months but with the heavy discounting to move property, much of the price adjustment in 'new builds' may have already taken place.
But as transaction levels begin to pick up (at lower price points), there is a certain inevitability that average prices could be dragged lower.
It may seem something of a paradox but the market could be in recovery mode even as average prices continue to drift lower.
Having completed more than 35,000 new dwellings in the period 2005/06 and 2006/07 – in my view, significantly above the required housing need – arguably this region has a temporary excess supply of new stock.
Painful though this is for the housebuilding part of the construction industry in the short-term, a period of cooler activity should help restore equilibrium and underpin price stability in the medium-term.
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Tuesday 14 February 2012
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