House price growth at lowest in nine years
The House Price Index, compiled by Permanent TSB and the Economic and Social Research Institute, found average house prices rose by just 3.3% between January and July, compared with an increase of 5.6% in the same period last year.
The slowdown is expected to continue in 2005 with the total increase for the year estimated to be just 5%, the bank said.
This means that, when wage inflation is taken into account, houses are set to become increasingly affordable.
The news was bleaker for owners of existing houses, whose values increased by an average of just 2.9% so far this year. Prices paid for new houses were 3.9% higher. These numbers were about half the increases recorded in the first seven months of 2004.
The average price paid for a house rose by just €8,000 since January and now stands at nearly €263,000. House buyers in Dublin paid an average of €350,000, while those outside Dublin paid just under €227,000.
New houses cost an average of €261,000. Second-hand homes changed hands for an average of €270,000.
Permanent TSB's research also found house price growth was slipping sharply year-on-year. Prices rose by an average of 6.2% in the 12 months to July, which was just over half the 11.1% increase witnessed in the previous 12-month period.
Permanent TSB head of marketing Niall O'Grady said house price growth had been "quite moderate" in the first half of the year. "July has seen a rise in the monthly growth rate, though this is not unusual with a rise in housing activity and prices normally experienced at this time of year," he said.
Average prices paid by first-time buyers were 5.6% ahead, however. The above-average increase was down to more first-time buyers opting for second-hand houses thanks to a change in stamp duty rules in last year's Budget.
He said 54% of first-time buyers bought existing homes this year, up from 47% a year ago. First-time buyers paid an average of nearly €234,000 in July.
