House prices to rise again

Irish house prices rose by 20 per cent last year and sellers can look forward to prices rising ahead of inflation in the first six months of 2003, according to Sherry Fitzgerald.

Ms Marian Finnegan, chief economist at the estate agent, said prices of second-hand homes in Dublin rose sharply in the last three months of 2002, up 4.5 per cent, bringing the annual rise to 20.5 per cent. Elsewhere, prices rose by a more moderate 3.4 per cent, bringing the growth in prices for the 12 months to 20 per cent.

Ms Finnegan said the degree of house price inflation in 2002 could be explained partly by the existence of pent-up demand at the start of the year following stagnation in the market towards the end of 2001.

Between them first-time buyers and investors accounted for half of all second-hand home sales during the year. The sharp acceleration in the last quarter was attributed to an end-year rush by investors.

The fall in interest rates at the end of last year should see prices rising faster than inflation in the first half of 2003, according to Ms Finnegan, but the market will slow down in the second half amid increasing supply and a less favourable economic environment.

"We should end 2003 with a more stable market with price inflation for the year returning towards a more desirable low double digit level," said Ms Finnegan.

A separate report yesterday showed prices in Northern Ireland rose by 15.25 per cent in the first three quarters of 2002.

The University of Ulster quarterly house price index indicated a 6.36 per cent increase in prices in the three months to the end of September last. The average house price north of the Border is now fractionally below £100,000 sterling. Demand was strongest for apartments and terraced houses.

The index is compiled in association with Bank of Ireland.