House values rising by €74.83 every day

AVERAGE house values are rising by close to €75 per day — making property almost as big an earner as income for people on the average industrial wage.

The latest results of the Permanent TSB House Price Index show the average price paid for a house nationally in March was €238,813. The figure represents an increase of over €27,000 on the equivalent price of €211,500 12 months ago. It also translates as an annual rise in property prices of almost 13%.

It means the value of the average family home is increasing by €74.83 per day. In contrast, workers on the average industrial wage of €28,000 per annum earn €76.99 each day a difference of just €2.16.

The figures are set to raise further concerns about the possibility of a bubble developing in the property market and the threat posed to borrowers by an increase in interest rates.

They were published on the same day the Central Bank revealed mortgage borrowing soared in the first three months of 2004 to its fastest growth rate in more than 20 years.

Lending by financial institutions rose 26.9% as €1.3 billion was advanced to house buyers last month.

However, despite consistently strong demand for mortgages as a result of low interest rates, the Central Bank noted almost 80% of credit advances goes to other sectors of the economy.

On a slightly positive note for first-time buyers, the Permanent TSB figures noted that the rate of growth in house prices has eased marginally. The value of property rose by 0.7% in March, compared to 0.9% the previous month.

The figures for the first three months revealed a 2% increase in house prices, compared to 2.7% over the same period in 2003.

Commenting on the results, Niall O'Grady, head of marketing with Permanent TSB, said: "There is clear evidence of a gradual moderation in the rate of house price growth in the market."

Mr O'Grady said property experts still predicted an average increase of about 8% nationally over 2004, which he claimed would act as a welcome soft landing to more sustainable growth levels for the market.

The survey, conducted in association with the ESRI, also showed house prices in Dublin have grown at a slightly slower rate than the rest of the country so far this year. Since January, property values in Dublin have risen by 2.2%, compared to 2.4% elsewhere.

The average property bought in Dublin last month was €311,138. The same figure for the rest of the country was €208,575.

Similarly, the average price paid by a first-time buyer was €208,826 and €269,502 for others.