The rate of growth in house prices nationally has slowed from 10.5 per cent to 4.8 per cent (a drop of 54%) in the first six months of 2001 with signs that Government measures to assist first-time buyers are working.
The Irish Permanent house price index, which is compiled in association with the Economic and Social Research Institute, has recorded a return to more sustainable price increases in the housing market.
Irish Permanent chief executive Mr Harry Lorton said the housing market is healthy and sustainable although a slowdown in the rate at which new housing is coming on the market is disappointing. "There is no sign of any real collapse in house prices. We have a very solid housing market," Mr Lorton said yesterday.
The index shows monthly changes in the housing market. In June it showed a percentage point rise of 0.3 in house prices compared with a percentage point increase of 0.4 in May.
This is the sixth consecutive month that house prices have begun to moderate. The index shows that year-on-year, national house prices rose by 15.1 per cent in the 12 months to June compared with a rise of 16.9 per cent in the same period last year.
One of the most notable features of the market identified by the index is the convergence in the rate of house price increases between Dublin and the rest of the Republic. It shows the rate of house price increase in Dublin at 14.3 per cent compared with a 15.5 per cent rise in the rest of the State. The ESRI suggests this is a sign of a mature housing market and combined with a moderation in the rate of increase in house prices, signals a sustainable market.
It shows that prices for first-time buyers nationally rose by 3.9 per cent, down from a rate of 12 per cent in the same period last year.
It also shows that since the third Bacon report, investors have been squeezed out of the cheaper end of the housing sector, making room for first-time buyers. Before the recommendations of the third Bacon report were implemented, investors accounted for around 18 per cent of this market but are now almost non-existent. At the same time, the number of first-time buyers rose from just below 30 per cent to around 55 per cent.
This is being viewed as a very positive development and should underpin the stability of the housing market going forward.
The one negative feature thrown up is the slowdown in the rate at which the supply of new housing is coming on stream. In the first six months of last year there were 50,000 new homes completed compared with 43,000 so far in 2001. Mr Lorton said it now wanted to see the Government introduce measures to tackle housing supply problems.
