Cost of purchasing new houses increasing again

Housing inflation saw prices rise 0.9% in February. Edward Power reports.

Housing inflation inched upwards in February, reversing a trend that saw starter-home prices decrease moderately in January, latest research from Permanent TSB and the ESRI reveals.

House prices for new and second-hand houses increased by 0.9 per cent month-on-month, while the average year-on-year rise was 15.4 per cent.

This contrasts with January when the cost of new homes actually fell by 0.6 per cent and that of second-hand homes climbed by 1.1 per cent.

The findings mean that the average price paid for a house in February was €209,321 compared with €181,386 the same month last year.

Inflation was steepest in Dublin. Houses in the capital rose 18.6 per cent in the 12 months to February 2003, compared with 13.5 per cent in other areas, a significant step up from last year when respective annual increases of 1.8 per cent and 3.6 per cent were recorded.

The average price paid for a house in Dublin was €278,247 in February compared with €234,689 in Febraury 2002.

New-house prices increased 8.2 per cent year-on-year compared with 18.4 per cent for second-hand homes. The equivalent growth rates to February 2002 were 3.2 per cent and 1.9 per cent.

The average price paid for a new house in February was €202,391 while that for a second- hand house was €215,630 against €187,060 and €182,129 respectively for February 2002.

House prices for first-time buyers rose by 1.1 per cent in February, compared with January when they fell by 0.2 per cent. Prices for second-time buyers rose 0.6 per cent from 1.6 per cent in the previous month.

Analysts said the findings show that, while prices were increasing, a return to the high growth rates of recent years was unlikely in the short term.

"Following six years of exceptional growth, we expect that the more moderate rate of growth seen so far this year will continue through the rest of the year," according to Mr Niall O'Grady, head of marketing with Permanent TSB.

Housing inflation increased moderately in February, according to new figures. House prices increased by 0.9 per in February compared to a 0.8 per cent in January. Prices rose 15.4 per cent year-on-year in February, against 15.2 per cent for January.