House prices increase is 'higher than expected' in February

House prices rose faster than expected in February with new homes and those outside Dublin experiencing the most dramatic increases, according to the latest Permanent TSB index.

Prices nationally rose 0.9 per cent in the month, with the annual rate easing fractionally to 13.3 per cent from 13.4 per cent in January. The average price paid for property nationally was €237,179, up from €209,321 at the same time last year

However, there were significant differences within the figures. New house prices rose by 1.8 per cent in February, three times the 0.6 per cent increase in prices for existing homes. The rate of increase in the price of new homes is also up considerably on the 1 per cent recorded in January.

There was also a gulf in the acceleration of prices outside Dublin and in the capital. Prices in the city were up 0.4 per cent last month compared to 1 per cent elsewhere. This reflects the January figures which showed a 0.3 per cent increase in Dublin and 0.8 per cent in the rest of the State.

On an annual basis, prices in Dublin were up 11.2 per cent in February with those outside the capital rising by 14.2 per cent. The average price of a house in Dublin is now €309,347, more than €100,000 higher than the price elsewhere.

Permanent TSB's head of marketing, Mr Niall O'Grady said the figures, compiled with the Economic and Social Research Institute (ESRI), were "marginally higher than expected".

While he said Permanent TSB still expected prices to grow by an average of 8 per cent for the full year, he acknowledged there was some concern at the continuing strength of new house prices despite the record number of house completions.

Fine Gael leader Mr Enda Kenny yesterday accused the Government of targeting first-time buyers as a "soft touch".

He quoted Irish Home Builders Association figures showing that 45 per cent of the price of a house in Dublin was paid to the Exchequer in the form of taxes and charges, such as stamp duty, VAT and development levies.

"That means that €106,000 of the average price of €237,000 for a new home goes back into the central Exchequer," he said.

He said it was unacceptable that in the last seven years the share of total Exchequer finances derived from the new home market has increased from 3 per cent of the total tax take to 9 per cent.