Asking prices in Galway City have increased by 1.2 per cent over the first three months of 2008, after a significant drop during 2007, according to the latest price survey conducted by Daft.ie. Galway City is also the most expensive place in Connacht to buy a three-bed property, at an average cost of €319,000.

Prices remain static around the rest of Connacht, with the average house costing approximately €367,686. A three-bed property in the rest of Connacht is considerably cheaper than in Galway City – in Mayo a three-bed home costs €222,000 on average, while in Roscommon the cost is €207,000.

The report shows that asking prices are falling across the country. The most significant drops occurred in the most expensive areas of the country, with asking prices falling by up to seven per cent in three months in South County Dublin and Wicklow. Nationally over the past three months asking prices decreased 1.2 per cent.

The fall in asking prices in early 2008 marks a change from late 2007, when asking prices remained static, but many sellers accepted offers below the advertised price. "Sellers appear to have accepted that the downturn in the housing market may last a while", commented Ronan Lyons, economist with Daft.ie. "With huge numbers of property for sale in many parts of the country, sellers are now finding they have to reduce the asking price in order to attract interest from buyers."

The nationwide average fall of 1.2 per cent hides significant regional variation over the first three months of 2008. Prices fell in almost all parts of Dublin and Leinster – by up to seven per cent in the case of South County Dublin and Wicklow. Prices also fell in Cork city (down over five per cent) and Limerick city (down 2.4 per cent).

Other areas saw asking prices that were static or even slightly rising. In Galway city, where asking prices had fallen sharply in late 2007, they rose 1.2 per cent, suggesting that the substantial correction in asking prices in 2007 has had an effect. In parts of Munster, including Kerry, Waterford county and Cork county, asking prices have held up.

Commenting on the report, Dermot O'Leary, Chief Economist at Goodbody Stockbrokers, notes that the number of properties for sale will be a key indicator of the property market over the coming months. "Figures indicate that the total number of properties for sale stands over 50 per cent ahead of last year's levels. Prices won't begin to stabilise again until the stock for sale begins to fall more normal levels."

The average increase in the number of properties on the market hides differences around the country. In Dublin, of all the properties that have been put on the market since January 2007, just one in five was still on the market in March 2008. In Connacht and Ulster the figure is almost one in two, suggesting that the correction will take longer in these areas.

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