RESIDENTIAL PROPERTY PRICES fell across the country for the second straight month in February, according to new figures out today.

The latest house-price data from the Central Statistics Office showed a slight drop across the board for the month on the back of a larger fall in January.

Average prices in the Republic were 0.4% lower, while in Dublin the decrease was 0.7% – and 2.4% since the start of December.

Property prices outside the capital were flat for February after dropping in January. Only Dublin apartment prices bucked the trend with a 2% rise.

Davy chief economist Conal Mac Coille said the slowdown was “not surprising or undesirable” given that house prices no longer looked cheap by international standards.

Although Irish house prices are still 37% below peak levels, those peaks were unsustainable,” he said in a briefing note.

CSO CSO

New mortgage rules make an impact

Mac Coille said part of the drop may have come because the Central Bank’s new mortgage rules “reigned in exuberant price expectations - signalling that a new bubble will not be allowed to form”.

In its economic commentary out today, the ESRI also said the restrictions would put a dampener on house prices, although this could come at the expense of extra houses being built to cope with undersupply.

However Mac Coille said he didn’t believe the recent falls were part of a “sustained decline in Irish house prices” as properties may not be cheap, but they weren’t necessarily over-valued either.

“The lack of housing supply, particularly in Dublin, will also support prices,” he said.

In addition, the recovery in prices outside Dublin is at a far earlier stage. For now, wage growth has remained muted but will start to re-emerge as the labour market tightens, helping affordability.”

Eamonn Farrell / Photocall Ireland Eamonn Farrell / Photocall Ireland / Photocall Ireland

Savills research director John McCartney said it was hard for prices in Dublin to sustain the double-digit percentage rises that started in mid-2013 without peoples’ earnings also increasing enough to pay for them.

“Agents are now reporting that buyers are no longer in a frenzy to buy for fear that prices will run beyond their means,” he said.

This is a very positive development as expectations of rapid price growth can become self-fulfilling and can quickly lead to overheating.”

READ: Grangegorman squatters welcome “victory” as they resist eviction >

READ: Are you concerned landlord TDs could negatively affect rising rents? >