The price of second-hand houses in Dublin rose 6.52 per cent in the first quarter of the year compared with 2.89 per cent in the first three months of 2001, an estate agency said yesterday.

But Douglas Newman Good said the rate of increase would ease in the coming months as the supply of property into the market improved.

The agency attributed the first- quarter increase to increased demand from the investment sector of the market and a shortage of supply of second-hand property.

This, it said, "forced other purchasers, namely first-time buyers, to re-enter the market after a period of static activity in the second half of 2001, thus strengthening overall activity and putting upward pressure on prices".

The rise in prices was greatest in north Dublin, with the average price increasing by 7.52 per cent to an average €276,217 in the first quarter.

Southside properties rose 6.53 per cent in the period to an average €337,354.

Property in west Dublin rose 4.07 per cent to an average €191,148.

More than 550 Dublin properties sold during 1999 were revalued for the survey.

Stating that year-on-year figures for all of Dublin indicated a 0.08 per cent drop in values since early 2001, the agency said: "It is quite possible that the increases experienced in the first quarter will not set a precedent for the rest of this year and it is likely that far more moderate asset price inflation will be seen as the year progresses.

"The annual percentage change in the price of residential property has clearly settled back to a more sustainable level, providing greater stability in the market."