Irish house prices nationally grew by 11.8 per cent in 2006 up from 9.3 per cent recorded in 2005, according to the latest Permanent TSB/ESRI monthly House Price Index.

But the report, does indicate signs of a cooling down period, with growth slowing during the last six months of 2006. The rate of house price growth in the second half was measured at 3.8 per cent.

Prices
Permanent TSB/ESRI found prices growing by 15.9 per cent in Dublin during 2006 compared to 10.9 per cent in 2005.

House price inflation was highest in Dublin, Cork city and in Wicklow, Kildare and Meath. (Often referred to as commuter counties to Dublin)

The average price paid for a house in Dublin in December 2006 was E427,343, while the average price in Cork City was just under E350,000. Annual prices in the commuter counties of Louth, Meath, Kildare and Wicklow rose by 15.2 per cent compared to 10.2 per cent the previous year.

The index showed that Co Leitrim recorded the fastest rate of price growth in 2006 - with a rise in prices of 29 per cent; Co Sligo recorded the lowest growth rate of 6 per cent.

But the report noted that sample size for houses in Leitrim was low during the year and that the growth figure “should be treated with some element of caution”.

The index also showed that the cost of houses for first-time buyers grew by 11.8 per cent while for second-time buyers prices grew by 12.2 per cent.

The average price paid for a house by a first-time buyer was just under E280,000 - an increase of nearly E30,000.

Permanent TSB’s head of marketing Niall O’Grady said: “While the rate of growth for the year as a whole was very significant, the key insight from these figures is that the rate of growth moderated sharply during the year and that pattern is likely to dominate for the year ahead.

Our expectations for average price growth this year are between 3 per cent and 6 per cent - although we do expect that there will be significantly different experiences in different sectors of the market.”