Average houses prices fell for the fifth consecutive month in July, bringing the total decline since the start of the year to 3 per cent.
The latest house price index figures released by Permanent TSB (PTSB) and the ESRI show that, on average, homeowners have seen more than €9,000 wiped off the value of their property over the first seven months of the year.
A 0.4 per cent dip in July brought the average price paid for a house in the Republic down to €301,267, almost the same level as in June 2006.
In July, the most marked decline in house prices was evident in Dublin, with prices dropping just under 2 per cent, bringing the average house price in the capital down to €411,069.
In general, houses outside Dublin retained their value relatively well in July, falling by a modest 0.2 per cent. Since last December, average prices have dropped from €266,339 to €257,372.
However, the figures reveal that over the first seven months of the year, home owners in the commuter counties of Louth, Meath, Kildare and Wicklow have borne the brunt of the weakening market, with house prices reduced by 4.2 per cent over this period.
In December 2006, commuter-belt homes were selling for an average price of €344,186. By July, this had slipped to €329,732.
"Although the experience varies from sector to sector, the overall picture is one of a housing market 'marking time' after a decade of phenomenal growth," commented Niall O'Grady, head of marketing at PTSB.
"The fact that new house construction is slowing and we're coming towards the top of the cycle in terms of interest rates, are likely to be critical in determining how the market behaves for the remainder of this year."
The next six to eight weeks will be very important, as the traditionally busy autumn season gets underway, he said.
The fundamentals of the economy remain very strong, he added, and the medium-term outlook for the property market remains positive.
David Duffy, of the ESRI, said that although house prices are unlikely to return to very substantial growth rates over the remainder of the year, it is possible that they will stabilise, particularly if the ECB holds off on an interest rate rise on Thursday.
"The main thing that has contributed to the fall in house prices is the fact that interest rates have gone up significantly," he said. "Because all the other factors - employment growth, income growth . . . and the net influx of people into the country - all those have remained positive," he added.
Austin Hughes, chief economist at IIB Bank, pointed out that the pace at which house prices are falling has eased slightly, which may indicate a "very tentative sign of life".
He said that confidence in the market remains a key concern, and if it remains very weak, it may be necessary for the Government to push the issue up the economic agenda. He described the current market as "something of a standoff between sellers and buyers".
