Price of houses jumps by €14,000 in six months

HOUSE prices in Dublin climbed by almost €14,000 in the first six months of 2002, a survey revealed yesterday.

And auctioneers warned last night that the prices could increase by the same amount in the next six months. The national average price for a new three-bedroom semi-detached home rose almost 6% to 166,205euro by mid-July, according to the survey by the Institute of Professional Auctioneers and Valuers (IPAV) published yesterday. The cost is 9,406euro more than a similar house purchased in December.

The cities of Dublin and Cork recorded the biggest increase in prices, with the cost of a three-bed semi in the capital climbing 6.2% since December to 230,000euro, up 13,720euro. In Cork, the average price rose 8,985euro or 5.6% to 169,426euro. A breakdown of other cities was not available.

IPAV chief executive Liam O’Donnell said the price increases indicated the housing market was beginning to stabilise.

“Over the last number of years, we have seen yearly increases of between 22% and 23%, which is unsustainable. Last year, the rise was closer to 14%. Almost 70% of auctioneers believe house prices will increase for the remainder of the year, but the yearly increase looks likely to be around 10% or 11%. Growth of around 10% or 11% is more manageable. Everyone likes to see appreciation of their property. There were fears that after the surge in property prices the bubble would burst, but these figures show that prices are levelling off. That is a good sign,” Mr O’Donnell said.

He warned that unless supply continued to meet demand, prices would surge once again. The main stumbling block to building more houses, he said, was the introduction of the social and affordable housing scheme by the Government, which forced builders to allocate up to 20% of any new development to cheaper housing.

“Since the introduction of social and affordable housing, builders appear to be sitting and waiting to see how it works. Most people don’t want to have to pay through the nose for their house while their neighbour gets their house for free. If this keeps up, supply will dramatically fall off and prices will rise again,” he said.

The survey, compiled in association with the Centre for Real Estate Research at UCD, also found that eight out of 10 of the 200 IPAV members surveyed believe the reintroduction of mortgage interest relief in the last budget has brought investors back into the market. Up to 66% also believed planning polices in rural areas were not appropriate for the development of housing for local residents. Margaret O’Neill, of housing lobby group Threshold, said the hike in prices were removing the chance to buy a home from the grasp of most people.