Average national selling price of properties down 7% this year

THE FALL in house prices accelerated again last month, with the average national selling price of properties now down 7 per cent so far this year.

House prices dropped a further 1.1 per cent in September, a month that traditionally sees a bounce in buying activity after the summer property market hiatus, according to the Permanent TSB/Economic and Social Research Institute (ESRI) house price index.

Average selling prices are now down 10.6 per cent in the 12 months to September and have fallen 14 per cent since their peak in February 2007, the index shows.

The average price paid for a house nationally in September was €267,594, down more than €20,000 on the average December 2007 price of €287,887.

Further price falls are anticipated as the property market is inundated with an oversupply of properties, banks tighten their lending criteria and buyers remain lacking in confidence.

"There is little surprise in these figures, which continue the pattern of recent months. Looking ahead, we expect this pattern to continue for some time as both consumer confidence and the economic outlook for the year ahead remain weak," said Niall O'Grady, general manager of business strategy at Permanent TSB.

The index shows that property prices outside Dublin are falling more steeply than in the capital, dropping by 8.2 per cent over the first nine months of the year, compared to 6.6 per cent in the city.

The average price paid for a house in Dublin was €371,288 last month, compared to a price tag of €228,945 outside Dublin.

In the commuter counties of Louth, Meath, Kildare and Wicklow, prices are down 9 per cent so far this year, with the average price coming in at €292,497 in September - down €30,000 since the new year.

The average national price for a three-bedroom, semi-detached house in September was €282,902, down from €299,412 in December 2007.

Despite the half-point cut in interest rates earlier this month and an increase in mortgage interest relief for first-time buyers in the Budget, property prices are not expected to recover in the immediate future because of a glut of properties that remain unsold.

In a report published last week, Goodbody Stockbrokers said there were enough properties on the market to satisfy around 19 months of normal buying activity.

It estimates there are around 100,000 houses sitting vacant across the State, including holiday homes. Its analysis of the 2006 census shows the counties with the highest vacancy rate - Leitrim, Longford and Cavan - have also seen the highest levels of housebuilding per capita since then.