The air is slowly seeping out of the property bubble according to the latest house price index which has risen by 5.7 per cent in 2004 compared to 8.1 per this time last year.
The latest permanent tsb house price index reveals that over the last twelve months the growth in national prices was 11.1 per cent and continues a trend that has seen the year-on-year growth rates effectively fall each month from July 2003.
The moderation in property inflation is consistent with recent evidence that supply of new houses is catching up with demand which is good news for first time buyers.
Mr Niall O'Grady, of permanent tsb bank said the slowing trend supports projections of an annual rate of increase of 10 per cent for the full year. He said this growth rate would be "a welcome moderation generated mainly by the recent a surge in supply of new properties coming onto the market."
The rise in supply is most obviously felt in the first time buyer market which has seen a sharp fall in prices.
Over the first seven months of this year house price growth for first-time and second-time buyers was 4.6 per cent and 6.4 per cent respectively. The equivalent growth rates over the same period in 2003 were 9.4 per cent and 7.3 per cent.
The average price paid by a first-time buyer and a second-time buyer in July 2004 was €214,665 and €280,414 respectively.
The average price paid for a house nationally in July of this year was €247,295.
Dublin house prices grew by 5.4 per cent in the first seven months of 2004, while the equivalent growth rate outside Dublin was 6.7 per cent.
The average price paid for a house in Dublin and outside Dublin in July 2004 was €324,070 and €217,406 respectively. The equivalent prices in July 2003 were €294,189 and €192,520.
The average price paid for a new house in July 2004 was €241,219, while that paid for a second hand house was €254,279. The equivalent prices in July 2003 were €211,223 and €230,851.
However, the Labour Party disputed the figures, noting that the average house in Dublin now costs €20,000 more than at the start of the year, while a house outside the capital is €14,000 more expensive.
"The conclusion therefore that house price inflation is easing is well wide of the mark," said the party's environment spokesman, Mr Eamon Gilmore. "In reality, people on average incomes are being further priced out of the market."
He demanded Government action on the cost of homes and for restrictions to be imposed on developers hoarding land banks.
Fine Gael's Mr Bernard Allen said it was "practically impossible" for young people to get on the property ladder. He called for stamp duty for first-time buyers on second-hand homes to be abolished and for mortgage interest relief to be front-loaded for the first seven years. "The Government is still not addressing the core issue of prime demand and is paralysed into inaction about the housing crisis, especially in the Dublin area," he said.