The value of the Irish housing market has dropped in the past year and a half as demand for detached houses has fallen by about 10 per cent since the financial crisis.
The decline in the value of homes was largely driven by a reduction in the supply of housing, particularly in Dublin, where the value has been falling.
It also coincided with an increase in the number of vacant homes, the latest figures from the Irish Statistics Office show.
However, the value per square metre in the last 12 months was still higher than the average price of houses in the UK, which is currently about £250,000 per sq m, according to research firm Markit.
The average price per square foot in the US is $1,957, the lowest in the developed world.
According to Markit, the decline in value of Irish housing has been largely driven in part by a drop in the demand for house-building and a reduction of the number and size of houses that are being built.
“Demand for houses is declining as more households move out of rented accommodation,” said Paul Johnson, senior economist at Markit Ireland.
“While housebuilding activity has continued to pick up, this is still well below what is needed to maintain house prices at the current levels.”
A lack of supply and demand for houses in Dublin is also a contributing factor.
“In a statement, the Irish Government said that its housing policy has been effective in supporting the country’s economic recovery.
Under the Government’s new policy, prices are indexed to inflation and have been capped at about 7 per cent of disposable income.
Last month, the Government also announced plans to reduce mortgage rates by two per cent over the next three years, and to offer tax relief for people earning more than £180,000.
In addition, the Department of Social Protection will introduce an additional levy on homebuyers over the coming years, to cover the cost of the cost-of-living relief.
The Irish Government is also introducing measures to help those in rural areas by increasing the rate of tax payable to a maximum of €7,500 for the first €200,000 of assets, up from the current €4,000 level.
This tax relief will apply to all property purchased or leased, including homes, buildings and vehicles.
There will also be an increase of 0.5 per cent in tax relief to people buying property on a business basis.
Irish banks have also announced changes to their lending practices, in an attempt to help people in rural Ireland who have been priced out of the market.
Banks will now be required to take out mortgages on properties within two kilometres of the main roads in rural and remote areas, and within 100 metres of any residential property.
These are measures that will be rolled out over the course of the next two years.
The Government is still awaiting official data on the impact of the tax relief, but Irish Business reports that the change will increase the cost per unit of rental to €1,500.
Irish banks are currently offering a 30-day loan for €1m, which can be repaid in full for two years, or the maximum amount of two years’ interest-free credit at a rate of 1.8 per cent.