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News: Irish house price woe

Thu, 31 May 07

House prices in Ireland fell for the second month in a row in April...

This latest fall comes after a drop in March that marked the first monthly decline in over five years, a survey showed on Wednesday.

The average price of a house in Ireland fell 0.8 percent in April versus a 0.6 percent drop the previous month according to the permanent TSB/ESRI house price index.

The average price paid for a house in Ireland fell by 2,452 euros (1,667 pounds) from March to 306,619 euros and is now more than 4,000 euros below where it stood at the end of 2006.

National house prices continued to rise on an annual basis and were 5.1 percent higher in April than a year earlier although the rate of growth fell from 7.4 percent in March.

That compares with an 11.8 percent surge in prices in 2006.

Interest rates ‘dampening the market’

Interest rate increases by the European Central Bank have played a part in dampening the Irish housing market.

A debate ahead of last week's general election on the reform of tax paid by property buyers has also taken its toll.

"The uncertainty around stamp duty was still a factor in April and together with recent and likely future ECB rate rises both are impacting on demand for houses," said Niall O'Grady, head of marketing with the permanent TSB bank.

Economists have urged politicians to move quickly to reform stamp duty when Ireland's new parliament convenes in June in order to give prospective house buyers a clearer picture of what their tax liabilities will be.

The Irish central bank has warned that a sudden slowdown in the construction sector is one of the biggest risks to the fast-growing economy but believes a soft landing for the property and building sectors is the most likely scenario.

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