OFFICIAL figures last night confirmed that house inflation in Dublin is now running at more than 20 per cent. The Department of the Environment's annual Housing Statistics Bulletin reported average second hand house prices across the Republic rising at almost 17 per cent.

The latest statistics reveal that in the 10 years since 1987, while ordinary prices have risen by just 26.4 per cent, house prices in Dublin have soared by 127 per cent.

According to the document, new house prices in the Dublin area jumped 15.1 per cent last year, and 2.8 per cent in the last quarter of 1996. Across the State, new house prices rose by 14.5 per cent over the year and by 1.1 per cent in the last three months of 1996.

The cost of second hand houses rose even more steeply. In Dublin, buyers paid 20.5 per cent more in 1996 than 1995, with house inflation of 5.1 per cent in the final quarter. Across the State, the price of second hand houses climbed 16.7 per cent in the year and 1.8 per cent in the final three months.

The statistics serve only to confirm what estate agents and buyers have stressed since the beginning of the current house price boom.

"Vendors are looking for higher and higher prices for their properties ... people have got used to the rising market and are setting unrealistic reserves at auction," Mr Paul Newman, managing director of Douglas Newman Good, was quoted as saying earlier this week.

Last night's figures also indicate a shift in the type of mortgage being sought by borrowers. In the first quarter of 1996, some 55.2 per cent of loans were at the variable rate, with the remaining 44.8 per cent at a fixed rate. By the final quarter, there had been a huge swing towards fixed rate mortgages, with just 39.8 per cent of borrowers opting for variable repayments.

Observers said that several factors were likely to have caused this movement. Reasons included the good value being offered by many institutions in one year fixed mortgages, the perception that interest rates have dropped their base levels or close to them and concern among borrowers that the run in to EMU will see currency and interest rate fluctuations.

The survey confirms that house prices in the capital are considerably higher than in other cities. The average second hand home in Dublin in the last three months of 1996 cost £88,063, compared to £63,472 in Cork, a gap of £24,591.

In Galway, the average secondhand house has now risen to £72,724 in Limerick it costs £59,652, and in Waterford £50,415.

For new homes, Dubliners again must pay more on average £80,422 compared to Cork's £70,115.

A new house in Galway cost on average £77,408 in the last quarter of 1996, with the Limerick average being £69,218 and Waterford's £64,839.

Tracking the second hand house prices over the past 10 years shows that, in Dublin, the cost of houses has more than doubled, from £38,700 in 1987 to £88,063 at the end of 1996.