Shortage of large homes drives up house prices

HOUSE prices in Dublin have been driven up because of a shortage of family-sized homes in the city.

Estate agents Douglas Newman Good said prices at the top end of the market (homes worth in excess €700,000) have soared by 21% since last year.

At the lower end of the market (houses worth less than €350,000), prices have risen by just 7% since September 2003. On average, Dublin house prices have risen by 11.6% in the last year, with larger gains for houses on the southside because of the supply shortage.

The average price of a home in Dublin cost €376,555 at the end of September, a 2.4% rise on the previous quarter. But for houses costing more than €700,000, the quarterly rise was 3.7%.

DNG economist Paul Murgatroyd said the scarcity of large homes meant prices were increasing at a much faster pace than the national average. He said: “with the lower end of the market showing more moderate levels of price increases, this is good news for first-time buyers. At the other end of the scale, the scarcity of decent sized family homes in mature suburban locations has driven prices higher than expected, and these increases have certainly contributed to the overall rise in the average price that our figures show.”

Mr Murgatroyd says supply at the lower end of the market is increasing as people trade up and this (along with record housing output) was suppressing prices rises in this sector. “As a result of people looking to trade up because of high equity levels, a solid economic outlook and low interest rates, so demand has increased higher up the property ladder where supply is much tighter and hence price rises have been more dramatic.”

However, DNG says the days of soaring house prices are over and that for the rest of the year price inflation will reduce to single digits. The company said that as interest rates start to rise prices will ease.