Increase in house prices lowest in nine years

Growth in house prices touched its lowest point in nine years over the first five months of 2005, new figures have shown.

The latest edition of the Permanent TSB/ESRI house price index shows that average house prices across the Republic climbed by 1.8 per cent in the five months to the end of May.

This was less than half of the 3.7 per cent growth recorded over the same period of 2004 and marked the slowest five-month growth since the survey was first commissioned nine years ago.

The latest numbers also show that first-time buyers are facing higher price increases than other buyers.

"It's striking that house price growth for first-time buyers was 3 per cent over the first five months of the year compared to just 1.5 per cent for second-time buyers," said Permanent TSB's head of marketing, Niall O'Grady.

"The first-time buyer sector continues to warrant careful attention," he added.

The price paid for the average house in May was €258,898, marking annual growth of 6.6 per cent. This was slightly ahead of April's annual growth figure of 6.5 per cent but well below the annual growth of 11.5 per cent recorded in May last year.

The latest figures also highlight what Permanent TSB described as "the growing disparity" between the cost of Dublin homes and those in the rest of the Republic. The average price for a house in Dublin is now 53 per cent higher than the equivalent property elsewhere.

Dublin prices increased by 0.8 per cent in May, while properties in other parts of the Republic added 0.6 per cent to their value. In the same month of 2004, the equivalent price increases were 1 per cent and 0.6 per cent respectively.

Over the year to the end of May, Dublin prices rose by 7.5 per cent while those outside the capital climbed by 5.3 per cent.

The average Dublin house cost €343,562 in May, compared to €319,365 in the same month of 2004. Outside Dublin, the average house was sold for €224,366 last month, up from €213,173 a year earlier.

In counties within commuter distance of Dublin, prices increased by 0.4 per cent in May, and by 3.1 per cent over the first five months of the year. Prices last month were up 5.9 per cent on May, 2004. This maintained the annual growth recorded in April.

The average house price in the commuter counties of Louth, Meath, Kildare and Wicklow was €279,513 in May compared to €263,835 a year before.

A further breakdown of the survey shows that first-time buyers are now paying an average of €227,915 for their starter homes, while second-time buyers are paying €291,515.

The figures also show that the price of the average newly-built house rose by 9 per cent over the year to the end of May, compared to 6.4 per cent for existing properties.