As the 2000 selling season opens this week, house hunters are anxious to know whether prices can continue to rise at the rapid rates the Dublin market has seen in recent years.
While official figures suggest house prices in the capital have peaked, estate agents are predicting another year of strong growth, particularly at the top end of the market where an increasing number of young, wealthy buyers are chasing a restricted supply of period houses.
Most of these executives are either in high earning jobs or have cashed in on the sale of high-tech companies. The continued inflow of high-ranking business people and returning emigrants is also fuelling demand at this level of the market where buyers are paying anything from £500,000 upwards for quality family homes in areas such as Rathgar, Sandymount, Blackrock and Killiney.
Dublin has seen five consecutive years of growth in property prices, and while official figures indicate that the rate of growth peaked in 1998, house prices have continued to rise ever since, albeit at a slower rate.
Government statistics for 1999 show that house prices rose by an average 16 per cent in the first three quarters of last year, although figures for the full year will not be available until next month.
The official figures, compiled by the Department of the Environment, are based only on the total of mortgages granted and do not take account of cash payments in house purchases, usually a major feature of transactions at the middle to upper end of the market.
Dublin's top estate agency firms say that prices rose by 20 to 25 per cent last year, with some parts of the city seeing growth of 30 per cent. According to house prices monitored by The Irish Times, properties in some areas have risen in value by as much as 300 per cent since the mid-1990s.
Sherry FitzGerald is predicting that prices could rise by 20 per cent this year. The agency bases its figures on detailed surveys carried out through its 15-branch network.
"Last year, we predicted that prices would rise by 15 to 18 per cent and we came out looking conservative," says Simon Ensor, a director of Sherry FitzGerald. "This year, we have taken a closer look at things and we feel that it will be around the 20 per cent mark." However, over the past five years, Sherry FitzGerald and all the other estate agency chains have consistently underestimated the rate of house price inflation.
Rising interest rates this year may take some of the heat out of the market, but the new tax allowances outlined in the Budget may push up prices further, as couples may decide to sink their gain into a bigger mortgage.
Unlike the second-hand market, new homes prices are not expected to rise as rapidly as in recent years. The rezoning and servicing of large tracts of land, particularly in north and west Dublin, is likely to bring a much increased supply of starter homes on to the market by the autumn, with even more homes expected to be completed next year.
However, the cost of three-bedroom semis is creeping up from an average of £120,000 last year to close to £150,000. If this lead is followed in more out-of-town locations, some estate agents fear that price resistance will emerge over the coming months.
