Analysis:The news that house prices have fallen for the first time in five years should come as little surprise. Compared with February, the price of an average house fell by 0.6 per cent in March.
At €309,071 that price is now lower than at any time since last October, when an average house cost €309,963. Compared to March of 2006, however, house prices are still 7.5 per cent higher.
However the simple fact is that the rampant growth in house prices between the autumn of 2005 and autumn of last year was unsustainable.
Having grown by about 20 per cent over this period, some cooling down has been expected for some time now.
Rossa White of Davy stockbrokers predicts that prices will continue to fall for the next three months. However he also believes prices will still end the year higher than they started it
"We now assume that price growth will be 2.5 per cent on average in 2007," he said yesterday.
And it makes sense that prices have fallen back to levels seen in autumn of last year. That was when speculation about the reform of stamp duty began following remarks on the topic by the Tánaiste and PD leader Michael McDowell.
Not that speculation about stamp duty is the only factor behind price falls.
A steady rise in interest rates is perhaps the most significant one, as is the fact that the double-digit rates of growth seen in 2005 and 2006 probably overreached themselves. Some return to reality was inevitable.
As a slowdown in house prices this week caused a slump in Spanish property stocks, another McDowell entered the debate - Malcolm McDowell, head of economic affairs at the European Mortgage Federation (EMF).
He sees Ireland and Spain as the "bad boys" of the euro-zone property market which, apart from those two countries, has nothing to fear from any housing market collapse.
"I wouldn't conclude that Ireland or Spain are an example of what is to come in the rest of Europe."
For some international commentators, Spain and Ireland have allowed their property markets to get out of control and deserve what is coming to them. NCB economist Eunan King disagrees. Yesterday he was quick to point out the difference between Spanish and Irish housing markets.
Where Spain's market is over-reliant on fickle holiday-makers, Ireland's is backed by steady and strong growth in population, according to Mr King.
"In our view the Spanish bull has more to fear from the bear," he wrote in a research note. "The toreador may be closing in on the Spanish bull, but there is more entertainment to come in the Irish arena."
With an election set to be influenced by events in the property market, you can say that again.
