• Figures show national house price reduction of 0.8% in February – 2.1% fall in first two months
• National prices now back to February 2005 levels

Irish average national house prices fell by 0.8% in February 2009, according to the latest edition of the permanent tsb / ESRI House Price Index. This compares to reductions in January (-1.4%), December 2008 (-0.9%) and November 2008 (-0.5%). Measuring the rate of growth in the 12 months (year on year) to February, national prices were down by 9.7%. This compares to a decline of 9.8% recorded in the 12 months to January 2009. In the first two months of 2009 national house prices have fallen by 2.1% which compares to a reduction of 1.5% in the same period in 2008.

The average price paid for a house nationally in February 2009 was €255,999, compared with €261,573 in December and a peak of €311,078 in February 2007.

Commenting on the results, Niall O’Grady, General Manager Business Strategy, permanent tsb said “while affordability is improving for customers due to the series of rate reductions and two consecutive years of reductions in house prices, customers seem unconvinced that the market has bottomed out yet.”  

The permanent tsb house price index is a 3 month moving average. The index is based on the agreed sale price and is calculated using data from mortgage drawdowns. Therefore a lag may exist between the time the sale price is agreed and when the mortgage is drawndown.

The index does not take account of volume/activity in the market which is significantly down, as reflected in stamp duty receipts and mortgage approvals. Neither is the monthly sample size published for business confidentiality reasons. The CSO should produce such an index.

Dermot O'Leary, Chief Economist of Goodbody Stockbrokers, said in November 2007, that three reasons can be cited for a discrepancy between its expectations of house price falls and the permanent tsb / ESRI House Price Index. Firstly, the data are reflective of prices at the mortgage payment stage of the house-buying process. This can be some 3-4 months after a sales price is agreed, and, in a slower market, this lag could get extended further. Therefore, there is a significant lag between market prices and the official house price data. Secondly, the type of properties in the ptsb database may be concentrated towards the lower price range in the market. While recognising the fact that the ptsb data takes account of the different characteristics of the house, the average price in the country is well below the estimates contained in the dataset from the Department of the Environment. Finally, price incentives, which have become common for new scheme developments, would not get reflected in the data.

Dublin V Rest of Country
Dublin house prices fell by 2.1% in February while there was a reduction of 0.9% for houses outside Dublin. In January the relative price changes were -1.4% and -0.6%.
House prices were reduced by 13.3% and 9.5% in the twelve months to February 2009 in Dublin and Outside Dublin respectively. The equivalent rates to January were reductions of 12.4% and 9.9% respectively.

In the first two months of 2009 prices in Dublin and Outside Dublin have fallen by 3.4% and 1.4% respectively.

The average price paid for a house in Dublin and outside Dublin in February was €339,042 and €220,741 respectively. The equivalent prices in December were €351,096 and €223,984.

Commuter Counties: - Louth, Meath, Kildare & Wicklow
House prices in the commuter counties of Dublin fell by 2.3% in February 2009, compared to a decline of 0.6% in January. A year on year reduction to February 2009 in the Commuter counties at minus 17.8% compares with a decline 16.7% in the 12 months to January. In the first two months of 2009 prices fell by 2.9%.

The price of a house in the commuter counties in February 2009 was €259,425, down from €267,265 in December.

First time buyers V. Second time buyers
House prices for first-time and second-time buyers fell by 2.8% and 0.7% respectively in February 2009. In January the equivalent rates showed reductions of 0.8% and 1.9%.

House prices were reduced by 15.2% and 9.2% year on year to February 2009 for first-time and second-time buyers respectively. The equivalent rates to January were a fall of 13.5% and 8.9% respectively. In the first two months of 2009 prices for FTBs & STBs have fallen by 3.6% and 2.6% respectively.

The average price paid by a first-time buyer and a second-time buyer in February 2009 was €216,034 and €288,743 respectively. The equivalent prices in December were €224,153 and €296,302.

New V. Existing Houses
House prices for new and existing houses were reduced by 0.6% and 1.0% respectively in February 2009. In January the relative price reductions were both at 1.3%.

New and second hand house prices fell by 9.2% and 11.3% respectively year on year to February 2009. The equivalent rates to January were minus 9.0% and minus 10.8% respectively.

In the first two months of 2009 new and existing house prices were reduced by 1.9% and 2.3% respectively.

The average price paid for a new house in February 2009 was €261,483, while that paid for a second hand house was €251,111. The equivalent levels in December were €266,466 and €256,956.

- WWW.FINFACTS.IE, House Prices Survey