Price slowdown gives first-timers space

City-dwellers are by now well used to new clusterings of cranes signalling the further expansion of the suburbs: some 77,000 new houses were completed last year and a further 74,000 are in the pipeline for this year.

The increase in supply means that the era of double-digit house price inflation may be over, says Bank of Ireland's chief economist, Dr Dan McLaughlin.

Noting the gradual slowdown in the monthly rate of price gains on average houses in Ireland, BoI's Irish Property Review predicts that house prices will increase by an average of 5 per cent during 2005. For first-time buyers scouring the cities, commuter towns and satellite towns for an affordable set of four walls and a roof, the slowdown in house price increases suggests that they will have time to breathe and review their options for a couple of minutes without prices shooting up beyond their reach while they exhale.

With average earnings in Ireland on the rise and interest rates still at a 50-year low, first-timers are having a good time of it, BoI implies. Its study of the changing mix in the make-up of new house completions indicates that starter homes are the order of the day.

Apartments continue to increase as a share of the overall completions, rising to over 22 per cent of the total in 2004. But it is the "semi-d" that has pushed itself to the top of the popularity charts, accounting for one in two houses built in the first nine months of last year compared to one in four in 2001. But not everybody wants to pick their property from the 70,000-plus new completions on the market.

The downsides of buying new rather than second-hand can include having to formulate an idea of what your dream home will look like by squinting at the mini-map of cleanly drawn boxes otherwise known as "the plans". It is also often impossible to tell what the development and the area will be like when it's finished.

Then there are the waiting periods of up to 18 months before you can actually say goodbye to your landlady, draw down the mortgage and move in. By this stage, you will probably have to go through a new series of credit checks and supply more recent bank statements and P60s than the ones you submitted when you first got mortgage approval.

The second-hand world has got its difficulties, too, however, namely the gut-wrenching ups and downs of the bidding process.

The temptation to put in a bid that exceeds your combined mortgage plus savings is always a problem and, when the bids on certain properties inevitably circle up toward the new stamp duty threshold of €317,500, there can be a nasty shock in store.

On second-hand properties, first-timer bids of €317,501-€381,000 attract stamp duty at a rate of 3 per cent, instantly adding over €9,000 to the cost of the purchase. Crucially, this €9,000 cannot be borrowed from the mortgage lender, who will only usually advance a maximum of 92 per cent of the property value.

So with many bids on the second-hand market reportedly coming to a natural stop just below this threshold, people who can borrow 92 per cent of €317,500 will be in a better position than those whose earning power falls just short.

Over 25 years and at a typical tracker mortgage rate of 3.1 per cent, the repayments on this €292,100 sum are €1,400 a month.