Ireland’s house prices rose by 1.0 per cent in February, the latest Permanent tsb/ESRI House Price Index reports.

Although less that the 1.2 per cent recorded in January, this means prices have gone up by approximately 1 per cent each month since July 2005. In the first two months of 2006, prices rose by 2.2 per cent compared to just 0.6 per cent in the same to months of 2005. It was as long ago as 2000 that prices last rose more in the first two months of the year.

The year on year rate of house price inflation to February was put at 11.1 per cent, up from 10.2 per cent in January 2006 and 7.9 per cent recorded to February last year

The average price paid for a house in February was just over £224,000 – some £4,000 up on the December 2005 figure.

‘It has been a very strong start to 2006 with prices growing so far this year at rates not seen since 2000. The strong growth trend from the second half of 2005 has continued into the first two months of 2006 driven by confidence in the economic outlook and the imminent first tranche of SSIA (Government sponsored Special Savings Incentive Account) maturities’, said Permanent tsb head of marketing Niall O'Grady. ‘Going forward, we expect that this will be balanced somewhat by the recent ECB rate increase’.

Dublin house prices grew by 1.5 per cent in February while there was growth of 0.9 per cent for houses bought outside Dublin. In January 2006 the relative price increases were 1.2 per cent and 1.5 per cent.

Prices in the commuter counties of Dublin grew by 1.2 per cent in February 2006, compared to 1.9 per cent in January 2006. Growth during the first two months of the year totalled 3.1 per cent compared to 1.3 per cent in Januiary and February 2005.

Overheated housing market may burst, warns think tank
The housing market was overheating and could suddenly burst with the impending interest rate rise, a leading think tank warned today.

A survey conducted by leading research bodies across the EU, including the Economic and Social Research Institute in Ireland, said interest rate rises would help cool down prices.

However, the picture is not entirely rosy for property investors.

Commenting on an economic assessment of the euro area by the Europeabn Forecasting Network, the Economic and Social Research Institute (ESRI) said that from Ireland’s perspective, an important feature of the forecast was the likelihood of continued increases in ECB interest rates. This, it said, would ‘lead to further increases in mortgage re-payments and possibly to a cooling in the property market’.


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