House prices continued to rise in August but at a slower pace than last year, as an increase in the supply of new houses being built helped to ease price pressures.
Permanent TSB's house price index has recorded a 6.8 per cent increase in prices throughout the Republic in the first eight months of 2004, down from 9 per cent in the same period last year.
The bank's head of marketing, Mr Niall O'Grady, said the significant increase in the supply of new property coupled with very strong annual growth levels over the past eight years is leading to a moderation in the rate of price growth for 2004.
"These trends support our projection of an annual rate of increase of 10 per cent for the full year," he said.
The index shows that prices rose by 1.1 per cent from July, while the annual rate of growth was 11.5 per cent, largely unchanged on the previous three months.
The average price paid for a house was over € 250,000 for the first time. House prices in Dublin were up 1.6 per cent in August, faster than the 1.1 per cent growth in July, while prices elsewhere rose by 0.9 of a percentage point.
Prices for first-time buyers increased by 1.8 per cent in the month, while prices for second-time buyers were up 0.8 of a percentage point. Prices of new and second-hand houses rose by 1.3 per cent and 1 per cent respectively in August.
The average price paid for a home in Dublin was €329,384 while outside Dublin the average price was €219,376. These compare with a price of €298,196 in Dublin in the same month last year and €194,125 outside Dublin.
The average price paid for a new house was €244,386 while the average cost of a second-hand home was €256,816.
Meanwhile, estate agents Sherry FitzGerald separately suggested an easing in house prices saying the pace of growth slowed to 2.4 per cent during the third quarter of this year compared to growth of 3.9 per cent in the previous quarter. This brings the overall inflation rate in the second-hand market to 10.2 per cent in the year to date, a reduction of 12.3 per cent in the same period last year.
Sherry FitzGerald's chief economist, Ms Marian Finnegan, said the current period of more moderate price growth is very positive news for the property market. "The combination of a reduction in the gap between demand and supply and rising interest rates will facilitate a further moderation of house price growth in the year with current estimates suggest price inflation will average 10 per cent in the year ahead."
Ms Finnegan suggests that this trend should continue into the final months of the year with overall price inflation for the year likely to average 15 per cent.
