House prices in Dublin rose by €15,000 on average in the first three months of the year,according to a new survey.

The findings by auctioneers Douglas Newman Good challenge predictions that property inflation is set to moderate substantially this year.

Prices increased by 4.7 per cent since January 1st, pushing the average cost of a home in the city to €325,108 from €310,405, the Douglas Newman Good house-price gauge revealed.

The year-on-year rate of increase was even steeper at 19.2 per cent. Housing inflation was on course to hit 10-12 per cent for the year, according to Mr Keith Lowe, economist with Douglas Newman Good.

Mr Lowe questioned a recent forecast by Central Bank governor Mr John Hurley that prices could plateau or even fall in 2003.

"Recent commentaries, including that of the Central Bank, have stated that market conditions are softening and other recent reports have pointed towards imminent price falls, but the factual results from quarter-one property sales prove that this is quite obviously far from the case," according to Mr Lowe.

"The short-term outlook will see a continuation of price rises fuelled by relatively low levels of supply of second-hand properties coming onto the market, the continuing low interest rate environment and ongoing uncertainty and weakness in other investment markets, notably the equities market," he added.

More €1 million homes had been auctioned in the opening quarter than in the corresponding period last year - proof of the market's continued buoyancy, Mr Lowe said.

However, a massive escalation of the Iraq conflict could potentially undermine price increases, according to the agents.