The average price of houses in the State increased by more in the first six months of the year than in all of 2001, according to the latest Permanent TSB House Price Index.
It follows a sharp rise in the number of first-time buyers and investors entering the market.
However, while prices State-wide posted very strong increases in the first months of the year, May and June saw slower rates of growth and those more modest increases are expected to be maintained in the second half. There has also been a marked change in first-time buyer habits in Dublin of late with more newcomers now opting to live in apartments than before.
The index shows house prices across the Republic rose by 5.6 per cent in the first six months of the year compared with 4.4 per cent for all of 2001. In the first six months of 2001, house prices rose by 4.8 per cent before falling by 0.4 per cent in the second half.
In March this year, prices rose by 1.8 per cent. This accelerated in April when growth reached 2.9 per cent before settling at 0.5 per cent in both May and June.
Mr Niall O'Grady, head of marketing at Permanent TSB, said the price of houses rose strongly at the beginning of this year as many first-time buyers who held off buying following September 11th decided to enter the market. There was also a threefold increase in the number of investors buying property arising from recent budgetary changes. These two factors combined contributed to the strong growth seen in March and April, and the May and June fall-off should be seen as a return to more sustainable rates of growth rather than any real slowdown, Mr O'Grady said.
"Certainly, the monthly rate of increase has come down considerably compared to earlier this year. We must also be conscious that average prices rose reasonably strongly in the first six months of last year, before actually falling in the second half of the year," he said.
In the six months to June, house prices in Dublin rose by 6.8 per cent compared with 5.2 per cent for a house outside Dublin. This compares to rises of 6.3 per cent and 4.4 per cent respectively over the same period last year. In June, house prices in Dublin increased by 2 per cent, but fell by 0.3 per cent outside the capital. The average price paid for a house in Dublin in June was €251,241 while outside Dublin it was €168,583. The equivalent for June 2001 was €239,568 and €159,168 respectively.
Nationally, for the six months to June, the average price of new houses rose by 1.7 per cent as supply kept pace with demand while the price of an existing house increased by 7.4 per cent.
Among first-time buyers in Dublin, the take-up rate of apartments has increased exponentially in the past 18 months. In 2001, the number of first-time buyers in the capital opting for apartments was 16 per cent, compared with just 7 per cent in 2000. And for the first six months of this year, that increase has been almost the same, with just under 15 per cent of first-time buyers opting for apartments.
