MarketSupply: Thousands of new homes are being built this year from Delgany to Dunboyne, Lucan to the new D13 town of 'Capital North'. And prices are not expected to rise significantly. Jack Fagan reports.

The fortunes of the new homes market are intrinsically linked to trends in the wider economy and the generally favourable economic prospects are good omens for the new year.

However, the inevitability of an oversupply of new homes in some Dublin suburbs and the off chance of a marginal increase in interest rates later on is expected to lead to a rush of new developments on the market in the early months of 2005.

New house prices, which to some extent reflect buyers' optimism about their future incomes, are not expected to rise anywhere near the 10 per cent likely to be reported for Dublin during 2004.

Any significant rise in prices is likely to be confined to mature sites in south Dublin and a few prime locations on the northside.

No other Irish industry has been the subject of so much scaremongering, in recent years with repeated warnings that house prices would inevitably fall.

Even the International Monetary Fund got in on the act but it all proved wide of the mark because of continuing immigration, fast-growing employment, higher wages and 50-year lows in interest rates.

Add to that the prediction by the CSO that an additional 22,600 immigrants will be needed here until 2036 and investors will look again at the dynamics of the rental market in specific areas.

The better than expected sales of new homes last year was all the more surprising because the number of units built during the year is estimated to have reached about 78,000, well above 1993's record figure of 69,000.

A healthy housing market keeps buyers' spirits up and gives them an appreciating asset against which they can borrow. It is also good for the economy, not least the fact that it accounts for 7 per cent of all employment.

But fast-rising house prices heighten concern that an unsustainable property bubble may be inflating. And they make it infinitely more difficult for first-time buyers to get on the property ladder.

Though the Government has had little success over the years in various attempts to cool down the new homes market, the December budget has made it more attractive for first-time buyers to opt for a second-hand house rather than a new one. The new threshold above which stamp duty has to be paid on a second-hand house is now €317,500.

And with reduced levels of stamp duty on purchases up to €635,000, some couples will undoubtedly look for older houses in established areas rather than move to new areas.

However, two agents specialising in the new homes sector, Brendan Byrne of Sherry FitzGerald New Homes and Ronan O'Driscoll of Hamilton Osborne King, say that selling prices for starter homes coming on the market will be "highly competitive".

O'Driscoll predicts that the change in stamp duty will have little or no affect on the new homes sector. "The reality is that people buy new homes for two reasons: they like brand new homes with top class fit-outs and they also like the idea that they can put down a deposit and have six to nine months to get themselves organised to move in."

Brendan Byrne handles sales for Dublin's largest housebuilder, Seamus Ross of Menolly Homes, which has a reputation for selling at lower prices than the competition to maintain a consistently high level of sales.

The company is currently developing 10 different sites in and around Dublin, most of them in prime areas where there is pent-up demand.

Nowhere has this been more evident than in the Baldoyle area of Dublin 13 where a major new town, Capital North, is to be built along the DART line to accommodate a population of 20,000 people.

Menolly and its partner Killoe sold 400 homes off the plans in record time before Christmas and is due to release further tranches in the coming weeks.

Sean Mulryan's international group, Ballymore, will also be building some of the proposed 7,000 homes in the "north fringe" along with Gannon Homes and Shannon.

There is also likely to be a strong level of sales in another new town due to take shape this year, Adamstown, near Lucan, which will have 10,000 homes to accommodate an estimated 25,000 people.

Dublin's most innovative housebuilder, Castlethorn Construction, is one of the three developers involved in the 500-acre site which will eventually have both a primary and a secondary school, shopping facilities, a leisure centre with swimming pool and a train station on site to speed up commuting to the city centre.

An outer ring road will link Adamstown with the N4 and the N7.

First-time buyers will continue to chase apartments and duplex units for the simple reason that the conventional three-bed starter houses that once dominated the market are now to be found only in a few areas and are generally priced well above the cost of apartments.

In Ballintyre Hall, Rathfarnham, three-bed terraced houses have been selling for between €490,000 and €535,000, a price level that is rarely achieved in either west or north Dublin.

However, those determined to get their hands on cheaper forms of houses rather than apartments should watch out for upcoming developments in Dunboyne, Feltrim (Kinsealy), Lucan, Rush, Delgany, Celbridge and Kilcock.

Ken MacDonald of new homes agent Hooke & MacDonald says that 75 per cent of all new homes built in the Dublin City Council area are now apartments while the figure for the suburbs is around 40 per cent.

An illustration of this is the fact that about 1,000 apartments will come on the market this year in about half a dozen schemes in Dublin's docklands.

Prices here are generally €300,000 to €380,000 for one-beds and €400,000 to €550,000 for two-bedroom units. He says that apartments are already growing in popularity due to improved design and the high spec finishes that are now being offered.

High profile schemes in south Dublin due to be handled by Hooke & MacDonald this year will include Elm Park, where the first of 300 units will be offered for sale next autumn and Booterstown. where PJ Hegarty will be building 140 apartments on a prominent site.