House price growth slows in wake of ECB rises

House prices nationally rose by 0.7 per cent in September - a reduction in the rate of growth for the fourth successive month.

The figures from Permanent TSB reinforce the view that the recent series of interest rate rises introduced by the European Central Bank are having an impact on house price growth in Ireland.

However due to the particularly strong growth in the first half of the year, the rate of growth so far this year is at 10.9 per cent, which is higher than expected. This is compared to 9.3 per cent for the full year of 2005 and 5.4 per cent for the same period of 2005.

Certain sections of the market have experienced even higher growth rates, with prices in Dublin and the commuter counties (Louth, Meath, Kildare and Wicklow) each up around 14 per cent to September.

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House prices in Dublin and outside Dublin both grew by 1.7 per cent and 0.6 per cent respectively in September. In August 2006 the relative price increases were 1.0 per cent and 0.9 per cent.

House prices grew by 17.9 per cent and 15.1 per cent in the twelve months to September 2006 in Dublin and outside Dublin respectively. The equivalent rates to the end of August 2006 were 17.2 per cent and 15.5 per cent respectively.

In September, the price of houses nationally rose by 0.7 per cent during the month, down from the rate of 1.0 per cent recorded in August this year and the 1.1 per cent, 1.2 per cent and 1.6 per cent recorded in July, June and May respectively.

The index also reveals that over the twelve months to September 2006 inclusive) the growth in national prices was 15.0 per cent.

This is down from the rate of growth to August 2006 (15.4 per cent) but still more than twice that recorded in the twelve months to September 2005 (6.2 per cent).

The average price paid for a house nationally in September of this year was €308,179. This was more than €30,000 higher than that recorded for December 2005 (€277,852).

Commenting on the results, Niall O'Grady, Head of Marketing, Permanent TSB said: "The trend of slowing growth in national house prices has continued for the fourth straight month, following the recent series of ECB rate increases. For the first time this year there has been a reduction in the past 12 month growth rate.

"Prices in certain areas, Dublin and its commuter counties in particular, continue to grow quite strongly. I expect this gradual slow down to continue and price growth nationally to finish the year at 12 per cent - 13 per cent."