Moving up the property ladder is no easy task

Ground Floor/Sheila O'Flanagan: Things are not going so well for my friend who's negotiating the Irish property market.

It's not a real tale of woe because (being in the same age bracket as myself) she bought a house back when interest rates were in double figures and it cost an even higher percentage of your take-home pay to buy a two-bedroom townhouse than it does now. She has now decided, however, that the time has come to move.

Well, she decided that about a year ago but has failed miserably in the attempt.

She's earning a salary that makes her bank manager smile so getting a loan was not the problem - it was getting her head around close to seven-figure sums for three-bedroom houses in Dublin.

She thought she'd found the ideal home and offered a little more than the guide price but was stymied by someone coming in with a higher offer.

The dilemma was whether to up her offer or retire gracefully from the field. She chose the retiring gracefully option. But this is the third time she has chosen this route and now she's beginning to wonder if she'd be better off just paying a fortune and getting on with it.

The problem is that paying a fortune means a much bigger loan and she's wondering if that will mean committing herself to the daily slog in an industry where she'd hoped to retire early. And what happens, she asks, if they suddenly think that, in her 40s, she's too old for the cut and thrust and she finds herself sidelined with a huge mortgage?

As with most homeowners, she had been both terrorised and heartened by the International Monetary Fund's (IMF) warning on Irish house prices earlier this year - terrorised because she was afraid that her bijou residence wouldn't sell, but heartened by the fact that a percentage drop at the higher end of the market would benefit her more.

Yet despite the news from the Permanent TSB House Price Index of a fall in Dublin house prices, she hasn't seen any evidence of it.

According to Permanent TSB the year-on-year increase has also come down, but it's still a hefty 13.8 per cent (from 15 per cent).

The main factor pushing up house prices - as we are told over and over again - is demographics. Demand is still exceeding supply. Changing lifestyles means that, where the market once consisted almost solely of married couples, now everyone - single, married and divorced - is looking for a property.

And despite the occasional slowdown, there's still plenty of demand. Every last inch of free space in my leafy suburb has been taken over by apartments (all with their own set of traffic lights to allow them onto the main road!) and it's impossible to go for a walk without falling over a builder's skip.

When my parents bought their house in the 1950s, it cost just over €1,300. Twenty years later, houses in the area were going for €15,000. Now they're nearly €400,000. Nobody blinks anymore if you say you're spending half a million on a house. You have to have well over seven-figure sums to spend before anyone takes you really seriously.

Still, to be taken really seriously in Ireland you only need €5 million to spend. In the US, as you'd expect, they do things bigger.

Forbes recently published its list of the most expensive US homes this year. However, putting a house on the property market with a high price tag doesn't always mean it will sell at that level. Some of the houses have been on the market for quite a while and, with $40 million-plus asking prices in an economy that has been struggling of late, you can't be too surprised.

Besides, it's only here that people negotiate prices higher. US sellers, unlike their Irish counterparts, are being forced to lower their prices in order to shift their properties. The Manhattan townhouse of Mr Bob Guccione (who published Penthouse) was on the market for $37 million but is now for sale at $29 million. The former publisher of Esquire (those men's magazines were obviously good for raking in the cash), Mr Chris Whittle, has knocked $9 million off his original price of $45 million for his Hamptons home.

But if money really is no object, you could spend $75 million on the Long Island property of Ms Cheryl Gordon. Cheryl is the widow of a real-estate man Mr Edward S Gordon, and the estate comprises a golf course, 65 acres of land, a selection of ponds and a 25,000 sq ft house.

I was wondering who on earth would really want a 25,000 sq ft house but then I read that Michael Jackson had looked over a Palm Beach property in December last year. The asking price was $40 million but Jacko didn't think that 22,900 sq ft was quite big enough for him. Maybe he should give Cheryl a call.