House prices rose just 0.3 per cent nationally in February, broadly matching the levels of the previous three months but at just a third of the rate of growth in February 2004.

The annualised growth rate fell below 8 per cent for the first time in almost three years, continuing a declining trend that has seen the rate of increase slide from 12 per cent last September.

In February 2004, year-on-year growth stood at 13.3 per cent, according to the Permanent TSB index published yesterday.

The average price of a house nationally in February was €255,776, just over €18,000 higher than the figure 12 months earlier.

Permanent TSB head of marketing Niall O'Grady said that prices appeared to be returning to an "acceptable level".

"While the performance of individual sectors of the market is still varying quite a lot, the overall trend suggests national house price growth of just 5 per cent for the current year - almost half the rate of growth recorded last year and inconceivable only a few years ago when national prices were rising by well over 20 per cent each year," he said.

There is still a notable difference in the rate of increase of property in Dublin as against homes elsewhere in the State. Prices in the city rose 0.4 per cent in February, slightly ahead of the 0.3 per cent recorded elsewhere.

However, the year-on-year increase in Dublin is 9.2 per cent, compared with just 6.6 per cent outside the capital, according to the index compiled by the bank in association with the Economic and Social Research Institute.

The rate of growth in Dublin is accelerating from January in contrast to other parts of the State. The average price of a residential property in Dublin was €337,535 last month while a home outside the city was much cheaper at €221,123 on average.

The commuter counties of Louth, Meath, Kildare and Wicklow recorded a monthly rise of 0.9 per cent in prices in February but annualised growth is just 5.8 per cent, lower than both the capital and the figure for the rest of the State.

Prices for new homes rose faster than any other sector, according to the data. In the year to last month, the average price of a new home nationally was €253,684, a rise of 10.4 per cent - the only double-digit increase recorded in the survey. Existing property was selling for 8.5 per cent more than in February 2004, for an average of €263,925.