HOUSE PRICES have fallen a further 6.4 per cent since the start of the year and are now at levels not seen since 2002, the latest data shows.

The Permanent TSB/Economic and Social Research Institute (ESRI) house price index indicated property values were now 35 per cent below their peak in late 2006.

However, the survey, which is based on the agreed sale prices and calculated using data from mortgage drawdowns, indicated the rate of decline had moderated significantly since last year.

The index showed house prices fell by 1.7 per cent in the three months from April to June this year, the lowest quarterly reduction since the second quarter of 2008.

The average price for a house at the end of June was €201,364, compared with €242,593 at the end of the second quarter last year and €311,078 at the market’s peak in 2006.

House prices in Dublin continued to fall at a steeper rate than in the rest of the country. Prices in the capital fell by 3.5 per cent in the second quarter of 2010, compared to –0.8 per cent elsewhere.

The survey, which is now conducted quarterly rather than monthly because of the fall-off in transactions, showed house prices in Dublin had declined 24.6 per cent in the last 12 months alone, compared to –14 per cent in the rest of the country.

The average price for a Dublin house at the end of June was €242,000, compared with €250,872 at the end of the first quarter of 2010.

The average price for a house outside Dublin at the end of June was €181,820, compared with €183,309 at the end of the previous quarter.

Permanent TSB’s Niall O’Grady said: “While prices continue to fall at different levels in Dublin versus the rest of the country, this reduction in the second quarter is the lowest recorded quarterly fall in almost two years.

“This may indicate that prices are starting to find a more sustainable level after almost 3½ years of decline,” Mr O’Grady added.

Brian Devine of NCB Stockbrokers said: “Anecdotally, the general perception is that prices are in fact down somewhere in the region of 40-45 per cent.

“This may not be too far off the bottom. In fact, under certain assumptions it is even rational to purchase at current prices given the costs of renting.

“The relative attractiveness of buying versus renting is also another swing factor in indicating that a bottom may not be too far off,” Mr Devine added. “The conclusion is that the final peak to trough price decline is likely to be in the region of 45-55 per cent in nominal terms.”