The average house in the Republic grew in value by 13.3 per cent over 2002, signalling a return to buoyancy in the property market after post-September 11th jitters, according to new data produced by Permanent TSB in conjunction with the Economic and Social Research Institute.
The research shows house-price inflation, which tapered off dramatically towards the end of 2001, followed a slow upward trend for most of last year. A surge in price growth came over the final months of 2002, culminating in a 13.3 per cent rise in December
Annual inflation for December 2001 was recorded as 4.4 per cent.
Permanent TSB general manager Mr Niall O'Grady singled out investor activity and "enthusiasm" among first-time buyers as the key drivers behind overall property inflation. Industry estimates suggest that investors account for about one-fifth of new mortgages.
Mr O'Grady believes the strong price growth recorded in the latter months of 2002 will be maintained in early 2003, resulting in annual inflation in "high single digits" by the end of the year. New homes are likely to rise in price at a slower rate than second-hand properties, said Mr O'Grady, who said supply of new homes was "more than meeting demand".
A similar forecast came yesterday from estate agents, Douglas Newman Good, which said the average second-hand property in Dublin would rise in value by 8- 10 per cent this year. Douglas Newman Good recorded a 21 per cent growth in prices across the capital in 2002.
The Permanent TSB figures show the average price paid for a house in December was €205,898, up from €181,697 in the same month of 2001.
In Dublin, the average house price last month was €272,671, compared with €180,405 outside the capital.
Mr O'Grady said the relative difference between prices in Dublin and outside had expanded "dramatically" over the past six years. The most expensive area last year was Dublin 4, where the average residential property changed hands for more than €520,000. Mayo offered the cheapest prices, with the average buyer picking up a home for €151,000.
Opposition parties took the average national inflation number as a new reason to castigate Government policy on housing. Green Party finance spokesman Mr Dan Boyle said the Government's stance on taxing property investors had done little but "pump up property prices", while Mr Bernard Allen of Fine Gael claimed the Government was more supportive of property speculators and investors than "the young people of Ireland".
"It seems that parents, who have worked hard all their lives, are now being expected to re-mortgage their family homes so that their hard-pressed sons and daughters can get on to the property ladder," said Mr Allen.
Permanent TSB's research suggests that the average first-time buyer finances almost 30 per cent of their purchase through means other than a mortgage, with parental aid the most likely explanation for this.
The average first-time buyer paid €178,945 for their home last month, compared with €232,486 for second-time buyers.
Permanent TSB executives were reluctant to comment on a new product from rival institution EBS whereby parents can unlock equity in their homes to finance a child's first property buy.
The five most expensive areas for residential property in 2002 were:
1. Dublin City (av €286,000)
2. Co Dublin (av €282,000)
3.Co Wicklow (av €262,000)
=4. Co Kildare (av €224,000)
=4. Co Meath (av €224,000)
(Source: Permanent TSB/ESRI)
Top Five Areas in 2002
