House prices for first-time buyers up 9.4%

Property prices are rising nearly twice as fast for first-time buyers as for existing homeowners, according to the latest Permanent TSB survey.

People looking to acquire their first home are now encountering an average price of €242,172 nationally. For those hoping to buy in Dublin, the average price tag is now approaching €300,000, and those prices are rising fast.

House price inflation for first-time buyers has risen by 9.4 per cent in the first nine months of 2005, almost double the 4.8 per cent rate being experienced by people looking to move up the housing ladder.

Overall, prices have risen 5.4 per cent in the year to date, a slowing from the 7.8 per cent pace in the same period last year. In the 12 months to September, the rate of increase nationally was 6.2 per cent, the same as the figure recorded by the survey in both August and July.

However, the figure is just over half the 12 per cent annualised rate recorded in September last year.

Niall O'Grady, head of marketing at Permanent TSB, said the figures indicated that, by the end of the year, house prices might rise by close to the 8.6 per cent recorded in 2004.

"After months of quite moderate growth this year, we have seen sustained price increases from July to September," he said.

"Dublin and the commuter counties particularly have experienced strong growth rates, while price growth for first-time buyers continues to easily outstrip all sectors as they switch their focus to existing houses rather than new ones following stamp duty changes in the last budget."

In September, prices rose by 1 per cent, in line both with August and with the same month in 2004. Nationally, the average price paid last month was €268,040.

The monthly rate of increase was broadly similar in Dublin and outside the capital, although prices in the city continue to outpace those elsewhere over the last 12 months. A home in Dublin now costs an average of €356,220, compared with €231,425 for property bought outside the capital.

Homes in the commuter belt saw strong demand, with prices jumping 1.7 per cent in September, nearly double the rate in the year-ago period. However, annualised inflation of 4.6 per cent for property is below the figure both for Dublin and for the rest of the country as a whole.

New homes experienced a 0.6 per cent increase last month, compared to a 0.8 per cent rise for second-hand homes.