House price inflation falls to 8.6% in 2004 - survey

House price inflation fell to 8.6 per cent in 2004, down significantly on the rate of growth of 13.8 per cent for 2003, according to the latest Permanent TSB figures.

In one of the strongest signs yet of a moderation in house price growth, the Permanent TSB/ESRI House Price Index showed that Dublin house prices rose by 8.9 per cent in 2004 while there was growth of 8.0 per cent for houses outside Dublin.

The corresponding growth rates in 2003 were 12.7 per cent and 13 per cent, respectively.

The figures showed a significant variation in rate of price rises across the country - from 16 per cent increase in Donegal and Cork to just a 5 per cent increase in Longford.

The index revealed house prices grew by only 0.2 per cent in December, bringing growth for the last three months of 2004 to 0.8 per cent.

This compares to a rise in house prices of 1.4 per cent in December 2003 and growth of 3.9 per cent in the last three months of 2003.

The average national house price in December was €254,215. The equivalent price in December 2003 was €234,066.

The price of a house in Dublin in December was €334,822, while the equivalent price for a house outside Dublin was €219,978.

Commenting on the results, Permanent TSB General Manager Mr Niall O'Grady said: "At a national level, house price growth during the year moderated as expected to more sustainable levels."

Mr O'Grady said: "At a regional level the rate of growth in some counties was particularly striking with Kerry, Cork County and Donegal each experiencing growth of 15 per cent or more."

He said: "At this time last year we projected annual growth of 8 per cent or 9 per cent for 2004, in line with our view of a moderating growth trend.

"Looking ahead we see this trend continuing which would suggest an annual growth rate of approximately 5 per cent to 7 per cent for 2005," he added.