House prices drop in January

THE slowdown in the growth of house prices has finally emerged with prices for first-time buyers dropping in January, according to the latest survey.

The Permanent TSB/ESRI house price index for January shows that the average price for first-time buyers fell by 0.4% last month, compared to a 1.1% rise in January of last year.

For the year to the end of January, prices for first-time buyers rose by 6.4%, compared to 7.9% in the previous year. The average price paid for a home was €220,589.

Overall, house prices nationally rose by 0.4% in January, up slightly from the 0.3% rise in November and the 0.2% gain in December. The figures mean the average cost of buying a house has risen by €20,000 since last year to €255,107.

Niall O’Grady, Permanent TSB’s head of marketing, said the trend of moderation in price growth which began last year appears to be continuing.

But he added: “While we should be careful not to make too many assumptions on the basis of just one months figures, a rate of growth in national prices of 0.4% is very consistent with our forecast of annual growth of between 5% and 7% for the current year.”

For the year to January, prices nationally were ahead by 8.5%. Permanent TSB said this increase was slower than what was recorded in previous months.

House prices in Dublin increased by 0.4% in January, compared to a rise of 0.3% for properties in the rest of the country. Annually, houses increased in value by 9% in Dublin over the 12-month period and by 7.4% outside of the capital.

The average cost of a house in Dublin was €336,028 at the end of last month, some €116,000 more than the average cost outside the city.

The survey also found that prices in the Dublin commuter belt - Louth, Meath, Kildare and Wicklow - rose in value by 0.4%, down from the 0.7% growth recorded in January 2004. The price of a house in the commuter counties in January 2005 was €272,164 up from €257,466 in January 2004.

The cost of a three-bedroom semi-detached house fell by 0.3% in January 2005, though prices were up 6.8% for the 12-month period. The price of a three-bed semi in January 2005 was €248,324.

The Permanent TSB/ESRI survey also found that house prices for new and second-hand houses increased by 0.3% and 0.4% respectively in January 2005.

New homes grew in value by 11.6% in January and by 8.8% for second-hand homes. The price of a new house in January 2005 was €251,951 while that paid for a second hand house was €263,251. The equivalent prices in January 2004 were €225,805 and €241,819.