House prices fell for the third consecutive month in November, according to the latest Irish Permanent House Price Index. In the most expensive Dublin areas, they have dropped by 8 per cent in the past 11 months with Tipperary, Mayo and Longford identified as the counties for the cheapest houses.

The index, compiled in association with the Economic and Social Research Institute, recorded a decline of 0.4 of a percentage point in house prices last month. This follows falls of 0.2 per cent and 0.8 per cent in September and October respectively. Overall in the first 11 months of 2001, it suggests house prices rose by less than a third of the rate achieved in 2000.

Across the State house prices rose by 5.3 per cent since the beginning of the year compared to a 18.8 per cent rise in the same period in 2000. The research also confirms the continuing trend towards lower rates of growth overall in the housing sector.

Mr Niall O'Grady, head of marketing at Irish Permanent, said house price growth had drifted back into single figures. "Looking forward, the key question is what level of impact on prices can we expect from the taxation changes announced in the recent Budget. The impact of these changes will determine whether growth will continue along current levels or pick up again in the months ahead."

In Dublin, house prices rose by 5.9 per cent in the year to the end-November with those outside the capital rising by 5.7 per cent. This represents a substantial slowdown compared to 2000 when prices were rising by 20.3 per cent in Dublin and 18.9 per cent in the rest of the State. The average price paid for a house in Dublin in November was £187,989 (€149,075) compared to £127,022 in the rest of the Republic. Prices for first-time buyers rose by 5.9 per cent in the year to end-November with second-time buyers facing slightly more modest rises of 4.7 per cent. This compares with increases of 21.3 per cent and 16.3 per cent in 2000.

The price of new homes across the State was 7.1 per cent higher with second-hand houses 3.4 per cent more expensive.