Average house prices have fallen for two months in a row in the face of strict new rules on mortgage lending, official figures have confirmed.
According to the latest report from the Central Statistics Office (CSO) in Dublin, the property market was down 0.7% in February while the rest of the country showed sale prices were static.
Despite the dip, the value of homes is up 14.9% on this time last year.
The CSO said the big loser was house prices in Dublin – down 1% last month. Apartments in the city showed a marked improvement of 2% at the same time.
The report put property prices 38% lower than their peak level in 2007.
The CSO data shows the property market nationally down 1.4% in the three months to February – similar to the picture that was recorded at the beginning of last year.
Records of deals for homes in Dublin showed the market down 2.4% for the same period.
When the city’s values and popularity are taken out of the equation, after it experienced double-digit growth from the middle of 2013, the fall is 0.3% for the three months.
Property consultants Savills said the drop was to be expected, based on the fast recovery in some parts of Dublin and the limits on borrowing being imposed by the Central Bank.
“This slowdown is not surprising or undesirable,” said a statement from Davy Research.
“House price inflation rates in excess of 20% in Dublin cannot be sustained without affordability becoming stretched. At over 5x average incomes, Irish house prices no longer look cheap – at similar valuation multiples to the UK.”
The statement added: “It is important to remember that the CSO index is a three-month average of completed transactions, so the recent negative price numbers actually related to agreed sales at the end of last year.
“Transactions in January and February 2015 were up 44% on the previous year – signalling little sign of a slowdown. If anything, this suggests that recent falls will be temporary.
“But it is too early to discern the ultimate dampening effect of the Central Bank’s mortgage lending rules on prices.”
The CSO’s director of research Dr John McCartney said: “With prices continuing to rise more quickly than earnings affordability constraints are beginning to have an impact. This has removed some of the heat that was evident in the market in the middle of last year,”.
“Agents are now reporting that buyers are no longer in a frenzy to buy for fear that prices will run beyond their means.
“This is a very positive development as expectations of rapid price growth can become self-fulfilling and can quickly lead to overheating.”