Just 13,000 mortgages were issued in 2011 compared with 200,000 in 2006. Irish Banking Federation figures suggest in 2011, just €2.3bn (£1.9bn) was available in mortgage finance compared with €40bn at the peak of the property market in 2006.
With no signs of mortgage credit returning to the market soon, and unemployment expected to rise in 2012, there are fears that property prices will continue to decline this year.
Marian Finnegan, chief economist at property group Sherry FitzGerald, said the biggest reason for the freefall was the lack of mortgage finance available from Ireland’s bailed-out banks. She added the market was “overcorrecting” with house prices now making it cheaper to buy than to rent.
Finnegan said the biggest shock was the level of deflation in Dublin, which “defied logic to a certain extent”. The new homes market was now “completely non-functional,” she said.
A house price index from the Sherry FitzGerald Group – found that the pace of deflation has sped up in Dublin, while prices across the country are now at levels last seen in 2000.
Separate surveys by two other property websites also found prices continued to fall in 2011 with myhome.ie reporting sale prices down 50% since 2006, while another site, daft.ie reported an 8% drop, or the largest ever quarterly fall in house prices in Ireland.
The Irish property market has tumbled from a frenzied high in the mid-2000s when homes in Dublin cost more per square metre than Manhattan.
Investment bank BlackRock predicted that, at best, house prices in Ireland would drop 55% before recovering and at worst 60% and now, those figures look like an underestimate.
