Sharp increase in house prices in August

House prices rose sharply in August, almost surpassing the growth seen in the previous three months combined.

The latest edition of the Permanent tsb House Price Index, which is compiled in association with the Economic and Social Research Institute, shows that house prices grew, on average, by 1.3 per cent last month.

This compares with an increase of 0.4 per cent in July and growth of 0.9 per cent in August 2001.

The index suggests that prices, which have risen by 7.4 per cent so far this year, are now on track to record more growth for the whole of 2002 than they did in 2001. Prices had risen by 6.8 per cent at the end of August last year.

Permanent tsb cautions against taking the August jump in prices as a trend, however, arguing that house price growth remains moderate when compared with previous years.

Permanent tsb spokesman, Mr Niall O'Grady, said: "While the August figures for price growth are surprisingly strong, it would be premature to suggest that this will form a pattern."

In the 12 months to the end of August, prices rose by 4.9 per cent, up slightly on the 4.5 per cent growth seen in the year to the end of July, but still down on the 5.2 per cent annual growth recorded in June.

Most of the monthly growth recorded in August came in homes located outside Dublin, where prices rose by 1.6 per cent.

Prices within Dublin saw no growth over the month, compared to the 0.5 per cent increase registered in all locations in July.

In August last year, prices rose by 1.2 per cent in Dublin and by 1.1 per cent outside the capital.

The average price paid for a house in Dublin during August was €252,461, up from €244,098 at the same stage last year.

Outside Dublin, the average price paid last month was €172,013. This compares to €163,766 in the same month in 2001.

First-time buyers across the Republic saw the biggest price increases, with the average first home costing €171,663, a 1.4 per cent growth on July prices.

Second-time buyers paid 1.3 per cent more, or an average price of €219,478.

The year-on-year growth for first- and second-time buyers was 4.1 per cent and 4.7 per cent respectively.

The index also points to more substantial monthly price increases for new homes than for second-hand properties.

The average price paid for a new house in August was €194,725, up 1.9 per cent up on July.

The average second-hand home cost €198,991 in August, 1.4 per cent more than in the previous month.

Since August last year, new and second-hand houses have risen by 3.2 per cent and 5.6 per cent respectively.