NATIONAL HOUSE prices have on average fallen by 26.7 per cent since February 2007 and are now at October 2003 levels, according to the latest Permanent TSB/ESRI House Price Index.

Average house prices fell by 1.8 per cent in the month of October to €228,347. This compares with €261,573 in December and a peak of €311,078 in February 2007, when prices peaked.

Prices declined by 12.7 per cent in the first 10 months of 2009 and are down 13.9 per cent for the year ending October 31st. A further 25 per cent drop “is not out of the question”, according to a new analysis by international researchers Capital Economics.

"Despite the sharp drop in house prices, property still looks expensive by historical standards," wrote analyst Ben May in a report, How Long Will Ireland's Hangover Last?

The report says that “perhaps the biggest concern is that the main source of Ireland’s problems – the property market downturn – may have considerably further to run.

“We would not be surprised if house prices fell by at least another 25 per cent, bringing house prices back to 2001 levels,” Mr May said.

The Permanent TSB/ESRI index shows the plunge in property values continued in October.

Average house prices fell by 2.6 per cent in Dublin to € 292,631. Outside of the capital, average prices declined 1 per cent to €199,754. For the first 10 months of 2009, Dublin house prices were down 16.7 per cent. For the rest of the country, prices declined 10.8 per cent.

In the 12 months to the end of October, house prices declined 19.1 per cent in the capital and 11.5 per cent for the rest of the country.