The rate at which house prices are increasing has slowed for the seventh consecutive month and is now at its lowest level in four years, according to new figures.

The Irish Permanent House Price Index, compiled in association with the Economic and Social Research Institute, indicates the rate at which house prices are increasing fell to 14.1 per cent in July from 15.1 per cent in June. In Dublin, the increase was also the lowest recorded in recent years at 13.1 per cent.

Actual house prices have grown by 5.9 per cent since the beginning of 2001 compared to a 12.5 per cent rise in the same period last year. In June, house prices rose by just 0.3 of a percentage point reflecting the seasonal slowdown in the market.

The Labour Party spokesman on housing, Mr Eamon Gilmore, said yesterday the research would bring little solace to first-time house buyers.

"The index suggests that prices will rise by 10 per cent next year. This is completely insufficient in making housing affordable. Stability in house prices is still a long way away and the average cost of a new home is well beyond moderate income couples," he claimed. Mr Gilmore added that the index suggested that developers have anticipated a slow-down and have cut back on the number of houses being built in order to keep prices high.

According to the index, Dublin house prices have risen by 7.2 per cent since the beginning of the year compared with 15.4 per cent last. The price of houses outside of the Dublin area were 6.1 per cent higher in the same period against an increase of 12.2 per cent in 2000.

The slowdown in Dublin was most marked in July with prices rising by just 0.8 of a percentage point in July compared with an increase of 1.9 per cent in July 2000, according to the index. Outside of Dublin city and county prices were 1.7 per cent stronger in July against 1.9 per cent in July 2000.

By looking at the price per square foot paid for houses in Dublin the index has shown that the price paid for houses over £300,000 (€381,000) has fallen by 5.7 per cent so far this year. This suggests the increase in house prices is being driven by the lower end of the market with the average price paid per square foot for houses under £300,000 increasing by 8.5 per cent.

The research reports that the average price paid for a house in Dublin in July was £190,184 compared with and average price of £127,482 outside the Dublin area.

The price paid by first-time buyers nationally continued to increase, rising by 6.2 per cent this year with second-time buyers seeing price increases of 6 per cent. The average price paid by a first-time buyer in July was £128,271 compared with £111,890 in July 2000.

The price of new houses has risen by 5.6 per cent in the year to date while there has been a 5.2 per cent rise for second-hand houses over the same period according to the index.

For the month of July prices increased by 0.7 per cent for new houses and by 1.2 per cent for second-hand houses. This compares with an increase of 1.4 per cent and 1.9 per cent for new and second-hand houses respectively in in July last year, according to the survey.