House prices in the Republic of Ireland fell by 9.1% last year, according to the latest figures published by the ESRI and Permanent TSB.

The fall in prices means that the average price of a home fell by over €26,000 to €261,573. 2008’s fall follows a 7.3% decline in prices recorded during 2007.

Properties in the commuter counties of Louth, Meath, Kildare and Wicklow recorded the sharpest declines over the year, dropping by 16.8 per cent, and by 4.5 per cent in December alone.

Prices for first-time buyer’s fell by 14 per cent with the average price paid by first-time buyers in December at €224,153, over €36,600 less than 12 months ago.

House prices for second-time buyers dropped by 7.8 per cent over the last 12 months and dropped 0.4 per cent last month, meaning that purchasers of a existing homes paid an average of €296,302 in December.

Niall O’Grady, of permanent tsb said after a decade of “exceptional growth, we’ve entered a period of retrenchment in house prices” and that the commuter counties were facing the most intense pressure.

“We don’t expect any significant change in the established pattern of this year and are guiding therefore to a further decline in average national prices in the order of 10 per cent during 2009 with some significant variations to that in different areas.”