House prices fall again but decline remains slow

HOUSE PRICES fell again in February but the rate of decline remained slower than the drop in prices during the last three months of 2007, according to the latest Permanent TSB/ESRI house price index.

Prices dropped 0.8 per cent last month, compared to a 0.7 per cent fall in January, leaving prices down 8.8 per cent on February 2007, when the house price index peaked. Prices fell 1.5 per cent over the first two months of 2008, compared to an average monthly fall of 1.3 per cent over the last three months of 2007.

Prices fell for the eighth consecutive month in February on a year-on-year basis, although prices have declined in each of the last 12 months on a monthly basis.

The average price paid for a house in the Republic in February was €283,650, compared to €287,887 in December 2007. The average price paid for a house in Dublin in February was €390,877 and outside Dublin €243,826.

Dublin prices fell 1.1 per cent last month, compared to a 0.6 per cent drop in January, and by 8.9 per cent in the year since February 2007. Houses outside Dublin fell 1.3 per cent last month, compared to a 0.9 per cent fall in January, and 8.8 per cent on the year.

Second-hand house prices are down 9.3 per cent since February 2007, compared to a 6 per cent decline for new houses. New house prices have fallen at a faster rate over the year; the equivalent figure for the year to January was 5 per cent, while second-hand houses fell 9 per cent.

New and second-hand house prices fell by 0.4 per cent in February, compared to falls of 0.4 per cent and 0.1 per cent respectively in January. The average price paid for a new house nationally was €287,913, down from €290,296 in December. First-time buyers paid on average €254,697 in February, down 1 per cent on the month or 8.9 per cent on the year.

Permanent TSB marketing manager Niall O'Grady said builders had started offering promotional deals on properties in the middle of last year to attract buyers but realised as the year progressed that prices would have to fall to entice buyers into the market. "Reality dawned that it was price that needed to change," he said.

"The rate of price decrease over the first two months of the year is lower than many people might have expected. We are also seeing that some sellers are finally grasping the point that people are interested in buying properties if the prices sought are realistic." He said this was leading to a greater number of house sales, compared to the last three months of 2007.

House prices are estimated to fall by 7 per cent this year, according to Goodbody Stockbrokers. The broker said further price falls were likely due to the large number of houses on the market. It estimated that the number of homes for sale is equal to at least a 12-month supply.