House prices grew by only 2.4 per cent in the year to January, compared with 20.6 per cent the previous year, a new survey has found.
The continuing slowdown in the rate of growth was underlined by the survey which showed thatprices fell by 0.9 per cent in January, the fifth consecutive month in which house prices fell.
Between September 2001 and January 2002, inclusive, prices fell by 3.1 per cent, according to the figures. However, several estate agents said the latest data were not an accurate reflection of what has been happening in the market since the Budget in December. The Budget introduced changes which make it more attractive for investors to buy houses.
The Permanent/TSB house price index, formerly the Irish Permanent house price index, shows house prices nationally grew by 2.4 per cent in the 12 months to January 2002. This is a low rate of growth when compared with the 12 months to January 2001, when growth was 20.6 per cent.
The year-on-year growth rate of 2.4 per cent is the lowest recorded since the index began in 1996. The index is compiled in association with the Economic and Social Research Institute.
It indicates that during the past year prices in Dublin have risen in the lower end of the market and fallen in the upper end. The average price per square foot for Dublin houses in the €380,000 plus category fell by 3.2 per cent, according to the index. In the under €380,000 category, prices increased by 6.8 per cent over the year to January 2002.
The index shows an overall fall of 0.5 per cent in house prices in Dublin in January 2002 and a fall of 1 per cent outside Dublin.
The average price for a house in Dublin in January was €234,079 while the equivalent for a house outside Dublin was €158,730.
Mr Ken MacDonald, managing director of Hooke and MacDonald, said he felt house price surveys "are for the birds" and don't reflect what is happening in the marketplace.
He said the market for new homes since Christmas had been "relatively static, it certainly hasn't gone down". First-time buyers have flocked into the marketplace since the Budget, having held back before then because of advice that prices might fall, according to Mr MacDonald. He said this advice was misplaced. Another factor bringing first-time buyers into the market was the high level of rents, which often meant it was cheaper for people to buy, Mr MacDonald said. The confidence which is returning to the market meant that developers were no longer holding back on housing schemes.
Mr Wade Wise, managing director of HOK Residential, said the market had "really sparked" during the second half of December 2001. "We were selling houses right up to Christmas Eve and we've had record sales in January."
He said the effect of this post-Budget change would become apparent in the indexes published over the coming months. The major problem at present was that not enough second-hand houses were being put up for sale, Mr Wise said.
Mr Niall O'Grady, head of marketing at Permanent TSB, said the index was a relatively up-to-date one as it was based on mortgage approvals rather than mortgages granted. He said he agreed with estate agents that there had been an increase in the volume of business since the Budget.
He said he expected this increase in volume to have an effect on prices in the next month or so "but that hasn't happened yet".
Confidence had returned to the market, Mr O'Grady said. However, some prices which had been paid at the upper end at the height of the Celtic Tiger period were now seen as being unrealistic, he added.
