There has been a three-fold increase in the number of 'sale agreed' residential second-hand properties in Ireland in Janaury 2010 compared to the same period last year.

A report by the prominent Irish real-estate website myhome.ie found that there had been a threefold increase in the number of ‘sale agreed’ second-hand residential properties in January 2010, compared with the same month last year.

At the same time, the primary barometer of Irish real estate prices – the Permanent TSB/ESRI house price index – will no longer be published monthly because of the dramatic fall-off in mortgage transactions.

Permanent TSB said that the volume of mortgage transactions had declined so significantly in recent months that an accurate snapshot of trends could not be obtained during the average monthly period. Permanent TSB said its property price survey will now be published on a quarterly basis, with the first quarter figures to be published in April.

These two developments appear to directly contradict each other.

On real estate blog sites, myhome.ie’s optimism was ridiculed.

“Myhome call the bottom … again”, one blogger scoffed.

More objective commentators are suggesting that there is significantly more trouble ahead for the Irish housing market and, on the face of it, myhome.ie’s efforts to foster some optimism appear at best premature or, at worst, disingenuous.

The latest statistics are sobering.

Property prices tumbled by 18.5 per cent last year compared to a fall of 9.1 per cent in 2008. The rate at which houses lost their value quickened as 2009 progressed.

In the fourth quarter of the year, a national price fall of 8.5 per cent was recorded, more than double the rate of decline in any quarter since the market turned. So the downturn, according to the statistics, is accelerating.

One remarkable statistic to emerge in the past week was that a package of development land in Athlone, valued at €31m at the peak of the boom, is now worth just €600,000.

According to the respected economist and commentator David McWilliams, this statistic “has truly terrifying implications for all of us, because it means NAMA will bankrupt us.”

NAMA, the National Assets Management Agency, is the name of the Government’s clearing house for bad loans tied to property developments.

The anecdote about the development land in Athlone is an indicator of the problems facing NAMA, the Government and the taxpayers of Ireland. What value do you put on assets?

Credible commentators believe that with 300,000 empty properties around the country – and with unemployment, 
interest rates and mortgage stress on the rise – the value of Irish property can only fall further.

The risk of mass home loan defaults would be a further disaster for the Irish economy and the Government has moved to extend the period that lenders must wait before seeking repossession from loan defaulters.

They can see what’s coming.

Ireland’s real estate problems will continue until the supply and demand equation levels out. There is a massive oversupply of housing and 
demand is weak. Prices will continue to fall in the short term.

There is an inherent warning here for Australia where we seem to be on the cusp of another property boom. Houses in Sydney and Melbourne are among the least affordable in the world.

This is fuelled in part by high levels of skilled immigration, bringing high earners into the country who want to live close to the CBD.

On the flip side, supply is limited, pushing prices upwards.

It might be wise for house buyers here to reflect on Ireland’s growing problems before they borrow hundreds of thousands of dollars.

In the meantime, the Irish malaise deepens daily and there seems to be no end in sight.