House prices continue to rise, according to the latest Permanent TSB monthly survey, but at less than half the rate of the same time last year. Prices rose by an average of 1.3 per cent in April, slightly higher than the 1 per cent recorded in March but well down on the 2.9 per cent advance seen in April 2002. Dominic Coyle reports.

The fall in the rate of growth in the past year reflects, to some degree, the settling down of investor interest which surged at the beginning of last year as tax measures hindering the purchase of investment property were eased.

But, a day after the controversial Economist report predicting a potential 20 per cent fall in Irish property prices over the next few years, the survey compiled in association with the Economic and Social Research Institute (ESRI) gives no hint of a slump in prices.

Over the first four months of 2003, house prices in the State have risen by 4 per cent. Last year, the rise over the same period was 4.6 per cent.

The average price paid nationally in April was €214,146, up from €190,023 in April 2002. In Dublin, the average price paid was €279,815, up from €241,745. Average prices in the rest of the State rose from €169,020 to €186,025.

Commenting on the figures, Mr Niall O'Grady, head of marketing at Permanent TSB, said: "The rise in April was slightly higher than we might have expected. However, the continued moderation of the annual percentage increases suggests that we are continuing to see some moderation in the rate of growth."

House prices outside Dublin rose faster than those in the capital last month, continuing a recent trend. But over the last year, house prices in Dublin still rose half as much again as those elsewhere. Dublin prices were up 0.4 per cent in April and 15.7 per cent in the past 12 months. Elsewhere, prices rose by 1.3 per cent last month and 10.1 per cent over the year.

Demand among first-time buyers appears to be accelerating, if anything, with this group seeing a 2.7 per cent rise in prices over the month, compared with just a 0.6 per cent rise for people moving up the housing ladder.

A further indication of the difficulties facing those trying to acquire their first home comes with the figures for the increase in the cost of new homes - up 1.9 per cent - compared with a 0.6 per cent advance in the price of second-hand properties.

The situation for first-time buyers has worsened in recent months as, over the year, the price rises faced by both categories are roughly the same - 13 per cent for first-timers and 12.5 per cent for people trading up. Similarly, new home prices rose by 9 per cent over the year, less than the 14 per cent rise on second-hand properties.