Irish home prices fall 50pc from peak; Spain drops by a third

Housing prices in Ireland have fallen by 50 per cent since their peak in late 2007, while Spain's real estate values have fallen by almost a third, says Eurostat, the European Union's statistics office.

The data, which Eurostat released for the first time, shows the extent of the property crash that followed the global financial crisis from 2008 and propelled the euro zone into its own debt crisis that nearly broke up the currency area.

A bursting of the property bubbles in Ireland, Spain and, to a lesser extent, Portugal not only erased years of economic growth but left banks with trillions of euros of bad loans and has pushed up unemployment to record levels.

The magnitude of the losses meant Ireland needed a sovereign rescue after the government moved to save its banks, drove Spain to seek a bailout for its lenders, and deepened an economic slump that spread across the euro zone last year.

But underscoring the sharp economic divergences across the euro zone, house prices fell only 4 per cent overall in the bloc between their peak and the third quarter of last year because property has retained its value or risen in the richer, northern economies of Belgium, France and Germany.

In the most recent quarterly reading of the housing market's health, Eurostat said real estate prices in the 17 nations sharing the euro fell 2.5 per cent between July and September from the same period a year ago.

That was still the biggest drop since the third quarter of 2009, when prices fell 3 per cent and the worst financial crisis since the 1930s drove the euro zone into recession.

Compared with the previous quarter, house prices in the July-to-September period fell at a lower rate in Spain and Portugal and grew 1.6 per cent in Ireland in the third quarter.

No details were available for Germany, but in France, prices rose for the first time in four quarters by 0.9 per cent.

The European Central Bank's decision to put its huge financial weight behind the euro zone last year and buy the bonds of governments in trouble if asked has helped ease the crisis, but weak house prices show how far many countries are from recovering from the downturn.