The rate of increase in house prices has fallen to a virtual standstill as home-buyers feel the impact of the relentless rise in mortgage rates, according to new research from Permanent TSB and the Economic and Social Research Institute (ESRI).
The 0.1 per cent increase in house prices throughout the State in November, the lowest in almost five years, marked the sixth successive decline in the monthly house price index from the two organisations.
The decline was recorded against the backdrop of six interest rate increases from the European Central Bank (ECB) since December last year.
In addition, some first-time buyers are believed to have held off purchasing homes in November in anticipation of a concession on stamp duty in the Budget. That did not materialise, although the Government doubled mortgage interest relief for first-time buyers.
The annual rate of growth in the 12 months to November was 13.1 per cent, down from 14.2 per cent in the 12 months to October.
"House prices were virtually unchanged in November, while cumulative growth in the last three months was less than that recorded in the month of May this year," said Permanent TSB head of marketing Niall O'Grady.
"We have now experienced six months of gradual slowing in the housing market, with 2006 now likely to finish with 11-12 per cent growth in national house prices."
The index indicates that prices outside Dublin fell in November by 0.1 per cent, the first decline since December 2004. Prices in Dublin grew by 0.8 per cent in the same month, the research says.
According to Permanent TSB and the ESRI, such figures "reinforce the view that the recent series of interest rate rises introduced by the ECB are having an impact on house price growth".
The two bodies say the 11.7 per cent rate of growth so far this year was higher than expected, in light of particularly strong growth in the first half of the year. Such an increase compares with 8 per cent in the first 11 months of 2005 and 9.3 per cent for the full year of 2005.
The 0.1 per cent increase in national prices in November was down from 0.6 per cent in October, 0.7 per cent in September, 1 per cent in August, 1.1 per cent in July, 1.2 per cent in June and 1.6 per cent in May.
The average price in the State for a house in November was €310,409, more than €32,000 higher than in December 2005.
The average price paid for a house in Dublin was €427,042 in November, up from €368,576 at the start of the year. The average price outside Dublin was €266,530 in November, up from €240,201 at the start of the year.
The index also shows that rates of increase in house prices in the "commuter counties" of Co Louth, Co Meath, Co Kildare and Co Wicklow declined in November.
House prices in these counties grew by 0.6 per cent in November, down from an increase of 0.8 per cent in October.
