The decline in house prices is accelerating, according to data from the latest Permanent TSB / ESRI house price index, with prices in Dublin falling for the first time. Figures show that prices across the State are now 1.9 per cent lower than at the same time last year.
The average price paid for a property in August was €300,375 - more than €11,000 down on a peak reached earlier this year. The price for the average home in the Republic is expected to fall back below €300,000 this month for the first time since June 2006.
Permanent TSB yesterday downplayed the fall in property values. Niall O'Grady, head of marketing at the bank, said: "While we have seen attention- grabbing stories about declines in the asking prices for some houses, the index confirms that the actual rate of change in house prices across the country remains modest. Since the start of the year, prices have declined by 3.3 per cent on average."
The changed circumstances in the property market are illustrated by the fact that, this time last year, the index was recording annual house price growth of 15.4 per cent, compared with a fall of 1.9 per cent this August.
Goodbody economist Deirdre Ryan noted that, for the first time in the history of the index, annual price inflation in Dublin dipped into negative territory in August.
Prices in the capital have held their ground better than those elsewhere over the past year - largely due to a surge in prices in the capital at the end of 2006. But the data released yesterday shows that the average property price in Dublin is now 0.6 per cent less than it was in August 2006.
The value of homes in the rest of the State has fallen by 2.9 per cent in the same period.
The commuter counties have been particularly hard hit this year. In the first eight months of 2007, property prices in Meath, Kildare, Wicklow and Louth fell by 5.4 per cent. Values dropped by 1.3 per cent in August alone.
The one area of the market that held up in August was the first-time buyer segment, which reported no movement. The average price paid by a first-time buyer in August was €268,904.
However, first-time purchasers are paying about 3.5 per cent less than they were at the end of 2006.
New homes have fared better than older properties, with the two groups showing year-to-date losses of 1.9 per cent and 3.4 per cent respectively. However, the 1.2 per cent monthly decline for new home prices was also a first in the history of the index.
Ms Ryan said the index trends pointed to continued weak levels of activity in the housing market. "We are likely to see further price declines in the index in the months ahead as there is a time lag of up to three months in the reported data and recent anecdotal evidence suggests vendors have had to cut asking prices to sell their properties.
"Further, with the autumn selling season off to a rather sluggish start, further price declines may be needed to reduce unsold stock," she said.
