House prices: bad year for 2010, good year for 2011

House prices in city locations around the country will improve in 2011 following a major fall in asking prices in 2010.

The changes to stamp duty in the recent budget will help the market this year, the Irish Examiner reports. However, Chief economist with the Sherry FitzGerald Group, Marian Finnegan, told the Examiner that "true stability will only be achieved with a normalisation of the credit flow in the economy.”

Asking prices for residential property around the country fell 14 per cent in 2010, according to the latest report published by property website Daft.ie.

By the end of 2010, the national average asking price had fallen by 40% from the peak in 2007 and stood at just below €220,000.

Asking prices in Dublin fell 14 per cent on average, compared to a fall of 15 per cent outside major cities. Prices in Galway were 13 per cent lower than a year before, after prices fell sharply in the final three months of the year.

In Cork, Limerick and Waterford, prices fell by between 10 per cent and 12 per cent over the course of the year. Elsewhere, the extent of price falls varied from less than 10 per cent in Mayo to 20 per cent or more in Wexford and Kilkenny.

Ronan Lyons, economist with Daft.ie, said: "Despite another year of price falls, the market does not yet look in balance. On the supply side, the number of properties for sale remains very high, at close to 60,000, while on the demand side, a range of factors continue to weigh on prospective buyers, including tight credit and expectations of higher taxes and interest rates in coming years."