House prices continue to rise

House prices continued to rise in February although the rate of growth slowed slightly from January's levels, according to the latest index from Irish Permanent.

The price of houses nationally rose by 1.2 per cent in February, taking the average price of a new home to £103,158 (€130,980) from £101,911 the previous month.

However, February's growth rate slowed slightly from January's increase of 1.7 per cent, although prices were some 28 per cent above the levels recorded in February last year.

In the year to date, prices have risen by 2.9 per cent compared to 3.7 per cent in the first two months of 1998.

However, the overall Irish Permanent figures mask distinct differences between price growth in Dublin and elswhere. Prices in Dublin continued to rise faster than those in the rest of the State, increasing by 2.1 per cent in February after growing by 2.0 per cent in January. The average house price in Dublin, at around £134,000, was also much higher than elsewhere.

By contrast, price growth in the regions slowed to 0.8 per cent in February from 1.6 per cent in January.

Irish Permanent found that the prices paid by first-time buyers and second-time buyers grew at a broadly similar pace in February, at 1.3 per cent and 1.2 per cent respectively. The average price paid by a first-time buyer for their home was £86,506, up from £85,424 in January, it said.

The buoyancy in the market was borne out by credit figures released by the Central Bank last week. These showed that residential mortgage lending expanded by €372 million (£293 million) in February, taking the annual growth rate of mortgage lending to 19 per cent from 18 per cent in January.

Analysts expect that the rate cuts likely to follow from last week's decision by the European Central Bank (ECB) to lower official rates by half of a percentage point should further fuel house price growth.

The Irish Permanent has already announced it will cut mortgage rates by a quarter of a percentage point and other lending institutions are expected to follow with cuts of their own in the coming days and weeks.