House prices in greatest growth since 2000

House prices grew faster in the first quarter of this year than for the same period in any year since 2000, according to the latest edition of the Permanent TSB/ESRI House Price Index.

The increase comes despite recent interest rate rises and warnings over the continued rates of growth.

First-quarter growth of 3.5 per cent this year compares with 1 per cent in the same period last year and is the greatest rate of growth since an increase of 4.8 per cent was recorded in the first quarter of 2000.

House prices rose by 1.3 per cent in March, slightly up from the rate of 1 per cent recorded in February.

Over the 12 months up to March, the index reveals that house prices rose by 12.1 per cent, significantly higher than the 7.5 per cent recorded in the 12 months to March 2005.

The average price paid for a house nationally in March of this year was €287,664, almost €10,000 higher than the average of €277,852 recorded last December.

Dublin showed the greatest rate of growth, with house prices increasing in the first quarter by 4.3 per cent as compared to 3.7 per cent for houses bought outside Dublin. The equivalent rates last year were 1.5 per cent and 1.0 per cent.

House prices grew in the capital last month by 1.4 per cent, compared to 1.3 per cent for houses bought outside Dublin. The average price paid for a house in Dublin and outside in March 2006 was €384,247 and €249,168, respectively.

The equivalent prices at the start of 2006 were €368,576 and €240,201.

Permanent TSB is predicting an annual growth of 10 per cent in national house prices for the year 2006.

Niall O'Grady, head of marketing, Permanent TSB, said: "House price growth continues at a strong pace in 2006 with the annual rate now running at above 12 per cent. This strong growth is reflected across all main customer segments.

"However while the two recent ECB rate increases have yet to show any impact in slowing the rate of growth in demand or prices, we expect this to start being felt during the remainder of the year.

"Accordingly we retain our forecast of a 10 per cent growth in average national house prices for the full year 2006," he said.