The slowdown in the property market was confirmed today as new figures revealed there was a decline in prices outside Dublin in February, and a stagnation in prices overall, as potential buyers hang back on stamp duty uncertainty and higher interest rates.
According to the latest house price index by the Permanent TSB/Economic and Social Research Institute (ESRI) there was no growth in national prices in the month, and house prices rose just 1.6% in the six months to the end of February.
And separate figures from Estate agent Sherry Fitzgerald today show a 1.1% drop in second-hand house prices in the first three months of this year.
The Permanent TSB/ESRI figures showed that house prices in Dublin grew 0.2% in February, compared to a 0.1% fall for houses bought outside the capital.
In each of the previous three months (November, December and January), national prices overall grew by just 0.1%.
The average price paid in the commuter counties of Louth, Meath, Kildare and Wicklow in January fell by 0.9% in the month to €340,756, compared to a 0.1% decline in January to €344,186.
The annual rate of growth in house prices slowed to 9.5% in February, down from 10.6% previous month.
The average price paid for a house nationally is now €311,078, compared to €310,632 in December.
Permanent TSB's head of marketing Niall O'Grady said :'The housing market is clearly in a state of price realignment, with very moderate price growth the most likely outcome this year'.
He added that stamp duty uncertainty, and recent interest rate hikes are factors, and it is unlikely that momentum will return to the market until the stamp duty question is resolved after the election.
The price of a three bedroom semi-detached house fell by 0.4% in February, compared to a 0.9% fall in January.
The average price paid for a house in Dublin, and outside the capital, in February was €428,850 and €267,293 respectively.
House prices for first-time buyers were unchanged in February, while second-time buyers paid 0.4% less than in January - according to the figures.
The average paid by a first time buyer and a second time buyer in February 2007 was €279,399 and €348,709 respectively.
And Estate agent Sherry Fitzgerald said today its figures show a 1.1% drop in second-hand house prices in the first three months of this year, following growth of more than 18% in 2006.
The fall was even sharper in Dublin, at 2.3%. The figures show prices rose by 0.2% in the quarter when Dublin was excluded.
Sherry Fitzgerald economist Marian Finnegan blamed 'a reduction in consumer confidence in the performance of the market' for the drop. She attributed this to higher interest rates and speculation about changes in stamp duty in the Budget.
Meanwhile, the European Central Bank has indicated it will increase its base rate by a quarter percentage point to 4% in June, but softening economic sentiment in the US could prompt it to leave its base rate at its current level of 3.75%, when its governing council meets next Thursday.
