AVERAGE HOUSE prices in Ireland are now back at the level seen in January 2004, according to the latest ESRI/Permanent TSB house price index.

Prices fell by 1.5 per cent in August, according to the data released yesterday, bringing the decline in the past year to 13 per cent. According to the survey, house prices have now been falling for two full years and are 24.4 per cent lower than at their peak in February 2007.

Niall O’Grady, general manager of business strategy at Permanent TSB, said the rate of decline had been more dramatic during the summer due to the low levels of activity in the market and a lack of confidence in any recovery this year.

“Recently, prices have started to fall faster in the Dublin region due to the high level of surplus stock available,” he said.

House prices in Dublin have fallen by 18 per cent over the past year, compared with a 12 per cent decline for property outside the capital, the survey found. The average price for a house in Dublin is now €306,795 compared to €351,096 at the turn of the year.

Away from Dublin, the average price is now €204,524. At the end of 2008, the average was €223,984. The survey is likely to show further falls in coming months as the index is a three-month moving average and is based on agreed sale prices, but only calculated when mortgages are actually drawn down.

The time lag between a price being agreed and a deal closed means that the influence of the lacklustre summer market will be felt for some time yet.

The lack of activity in the market is illustrated by the dearth of detail in the Permanent TSB survey. Traditionally, the survey provided data on the prices being paid by first-time buyers compared to people trading up.

However, the lack of business in the market has led the Economic and Social Research Institute to determine that there is not a sufficient sample size to produce meaningful data.

The same is true for figures on the difference between new and existing properties and for the performance of homes in the commuter counties.

On the basis of the survey, however, it is likely that most people who acquired their home in the past five years are now experiencing some degree of negative equity.