House price growth continues to drop

THE increase in house prices continues to moderate growing at a third of the rate they were 12 months ago, according to the latest Permanent TSB house price index.

The index, compiled in association with the Economic Social Research Institute (ESRI), indicates that house values nationally, measured by prices paid, rose by 0.3% in February.

This rate of growth is significantly down from growth of 0.9% in February, 2004, and continues the trend of low growth rates over the last four months: October 2004 +0.3%; November +0.3%; December +0.2%; and January +0.4%.

The report reveals that in the 12 months to the end of February, 2005, house values rose by 7.9%. This is almost 5.5 percentage points lower than the 13.3% growth in prices recorded in the 12 months to February, 2004.

However, with house prices so expensive, even the slowing rate of increase is adding considerably to the value of homes. The average house price grew by more that 18,000 in the 12 months to February of this year hitting €255,776 (2004: €237,179).

Permanent TSB Bank's head of marketing Niall O'Grady said after some extraordinary years, house prices at last appear to be returning to an acceptable level of growth.

"While the performance of individual sectors of the market is still varying a lot, the overall trend suggests national house price growth of just 5% for the current year almost half of the rate of growth recorded last year and inconceivable only a few years ago when national prices were rising by well over 20% each year," he added.

Dublin house prices, up 0.4% in February, continue to grow faster that those outside Dublin, up 0.3%. In February, 2004, the relative price increases were 0.3% and 1.0% respectively.

On an annual basis, house price growth was 9.2% in Dublin and 6.6% outside Dublin. The equivalent rates to the end of January 2005 were 9.0% and 7.4%.

The average house price in Dublin in February, 2005, was €337,535 and €221,123 outside Dublin. The equivalent prices in February, 2004, were €309,347 and €207,335.

House prices in the Dublin commuter counties Louth, Meath, Kildare and Wicklow grew at the fastest rate of any area up 0.9% in February 2005, the same level as recorded in February 2004.

House price growth year -on-year in these counties to February, 2005, was 5.8% slightly up from 5.7% in January, 2005. The price of a house in the commuter counties in February, 2005, was €274,614 up from €259,670 in February 2004.

The price of new houses grew by 10.4% in the year to February while secondhand house prices grew by 8.5% year-on-year to February 2005. The equivalent year-on-year rate of growth to January 2005 was 11.6% and 8.8%.

The price of a new house in February 2005 rose to €253,684 while that paid for a secondhand house was €263,925. Twelve months ago they sold for €229,887 and €243,162 respectively.