Further decline in house prices

House prices declined by 3.5 per cent in the final quarter of last year and are down 38 per cent since prices peaked at the end of 2006, according to the latest Permanent TSB/ESRI House Price Index.

While the rate of decline in average house prices in Ireland rose in the fourth quarter the rate of decline for the year as a whole was significantly less than what was seen in 2009.

House prices fell by 10.8 per cent in 2010 compared to a drop of 18.5 per cent in 2009.

The average price for a house nationally in the fourth quarter of 2010 was  €191,776, as against €215,086 for the same three-month period a year earlier and from €311,078 at the peak of the boom.

In Dublin, prices fell by 15.1 per cent for the year as a whole. The average price for a house in the capital was €237,480 in the fourth quarter compared to €238,986 in the preceding three-month period.

House prices outside of Dublin were down by 8.1 per cent for the year as a whole. The average price for a house outside of the capital was €174,570 in the final quarter of the year, as against €179,721 three-months earlier.

Permanent tsb general manager Niall O'Grady said it was unlikely the housing market would bounce back this year.

"With low transaction volumes, continuing price declines and a sluggish economy, the outlook is for a very subdued property and mortgage market in 2011," he said.

The Permanent TSB/ESRI House Price Index is based on the agreed sale price and is calculated using data from mortgage drawdowns.

While the index indicates that property prices are now back down to 2002 levels, estate agents Savills say that in some areas houses are transacting at 2000 price levels.