AVERAGE HOUSE prices fell by 0.8 per cent last month, according to the Permanent TSB and the Economic and Social Research Institute (ESRI).

This compares with reductions of -1.4 per cent in January, -0.9 per cent in December and -0.5 per cent in November, the Permanent TSB/ESRI house price index shows.

The average price paid for a house nationally in February was €255,999, compared with €261,573 in December and a peak of € 311,078 in February 2007.

In the 12 months to February 2009, prices dropped 9.7 per cent as against a 1.5 per cent reduction a year earlier. Prices have now fallen back to February 2005 levels, according to the index.

In the first two months of the year, average prices fell by 2.1 per cent. “While affordability is improving for customers due to the series of rate reductions and two consecutive years of reductions in house prices, customers seem unconvinced that the market has bottomed out yet,” Permanent TSB’s general manager of business strategy Niall O’Grady said.

Commuter counties, which have been particularly hard hit by falling house prices, fell by 2.3 per cent in February 2009, compared to a decline of 2.1 per cent for Dublin and 0.9 per cent for properties outside the capital. The average cost of a house in Louth, Meath, Kildare and Wicklow in February was €259,425, compared to €267,265 in December.

Meanwhile, the cost of housing in Dublin declined by more than €12,000 from €351,096 in December to €339,042 last month. Outside of the capital, average house prices fell by just over €3,000 over the same period to €220,741 from €223,984.

The average price paid for a house in Dublin and outside Dublin in February was €339,042 and €220,741 respectively. The equivalent prices in December were €351,096 and €223,984.

House prices for first-time buyers declined by 2.8 per cent last month and by 15.2 per cent in the 12 months to the end of February. Property prices for first-time buyers fell from an average of €224,153 in December to €216,034 last month.