House price index - Fall in house prices is not surprising

NOBODY should be surprised that there is a slowdown in house prices, in view of recent rises interest rate hikes and speculation about a possible change in the stamp duty as a result of promises being made by political parties.

These things were inevitably going to impact on the sale of houses, at least in the short term.

According to the latest house price index published by the Permanent TSB and the Economic and Social Research Institute, the price of houses was virtually static during February, and prices rose by just 1.6% in the previous six months.

Estate Agent Sherry Fitzgerald reported that there was a drop of 1.1% in second-hand house prices during the first three months of this year, in comparison with an 18% increase in prices during 2006. The fall in second-hand house prices in the first quarter this year was even more marked in Dublin, where prices fell by 2.3%.

The Central Statistics Office states that there are around 266,000 vacant houses in this country.

This amounts to 18% of all houses. Many are second houses or holiday homes, but there is also an element of property that is not selling because it’s not commanding expected prices.

On the other hand the price of new houses actually rose by 0.2% in Dublin during February, and by 0.1% in January, whereas prices increased by 0.4% outside the capital in January and dropped by 0.1% in February. These minor fluctuations would hopefully suggest the desired soft landing in the growth of house prices.