HOUSE prices fell at the slowest rate in four months in January. But the 0.7pc drop was enough to leave national prices more than 8pc down on January last year, according to the latest edition of the permanent tsb/ESRI House Price Index.

The January figure compares with an average drop of 1.3pc over the previous three months, which meant house prices were falling at an annualised rate of almost 16pc. Some builders have cut the price of new houses by up to 20pc, but most seem to be holding prices.

The figures revealed an improvement in the market for second-hand houses. Prices for new houses were reduced by 0.4pc in January, while second-hand prices fell by 0.1pc. In December 2007, the relative price reductions were 0.2pc each for new and second-hand houses.

That meant new house prices were down 5pc on January 2008 and second-hand homes down by 9pc. The equivalent falls to December 2007 were 4.1pc and 9pc. January's fall brought the 12-month national drop to 8.1pc, up from the 7.3pc recorded in the 12 months to December last year.

The average price paid for a house nationally in January was €285,880, which compares with €287,887 in December and €311,000 in January last year.

"There is mounting evidence that sellers are adjusting to more realistic asking prices and buyers are getting better value," said Niall O'Grady, Head of Marketing, permanent tsb bank.

Dublin house prices fell by slightly less than the national average, down 0.6pc in January, while there was a reduction of 0.9pc for houses bought outside Dublin.

This reversed the December pattern, when the relative price falls were 1.4pc and 1.0pc.
This also reduced the gap between Dublin and the rest of the country.
House prices outside the capital were down 7.6pc on 2007 and had dropped 7.7pc in Dublin. The average price paid for a house in Dublin in January 2008 was €395,096 and €247,070 outside Dublin.

This represented falls of €33,000 and €20,500 respectively compared with January last year.
House prices in the commuter counties of Dublin fell by 0.8pc in January 2008, the same reduction as in December 2007.

A year on year reduction to January 2008 in the commuter counties at 7.3pc compares with 6.6pc in the 12 months to December 2007.

By Brendan Keenan, Irish Independent, 03 March 2008