The price of new starter homes in the Dublin area has risen by between 16 per cent and 20 per cent in recent months in spite of Government claims that house price rises have been moderating. The increase, which has taken effect between the early winter and now, has come amid increasing warnings about the danger of a "bubble" developing in the property market.

New three-bedroom semi-detached houses which were selling for between £120,000 to £125,000 in October last are now making between £140,000 and £150,000. The increase is being attributed to the imbalance between supply and demand and a belief among buyers that the supply of houses will remain insufficient for some time.

Government policy for dealing with the housing crisis has been based on increasing supply. The Minister for Environment, Mr Dempsey, has suggested that his Planning Bill currently going through the Dail will help speed up planning and servicing of land.

However, there has been no significant increase in house completions in the four local authority areas in Dublin since the Bacon measures were introduced more than 20 months ago. Although 6,850 acres are zoned for housing, developments have been slow to get under way because of serious delays, both in the planning process and in servicing the sites.

Developers are also concerned about the decision by the planners to block three high-rise apartment schemes in the Dublin docklands. There is also a perception among developers that the planners are reluctant to implement higher densities.

The new homes shortage in the Dublin area comes at time when estate agents have logged a sharp increase in inquiries from first-time buyers. The small number of schemes launched this year have sold out and, in one instance in Swords, buyers queued overnight. Although a range of starter home schemes are due to come on the market over the coming months, agents are warning that there will be a serious shortfall until at least the autumn.

While the cost of three-bed semis in south Dublin has been generally above the £150,000 mark for over a year, the decision by developers to move prices up to that level in west and north Dublin - the traditional areas for starter homes - will undoubtedly cause concern in Government circles.

Last October, three-bed semis in the latest phase of Joe Tiernan's Finnstown scheme, near Lucan, cost £150,000. The price of the final 12 houses has been moved up to £160,000. Three-bed semis in Finnstown cost £65,000 when the scheme opened in January, 1995. By the end of 1998, the selling price had almost doubled to £120,000; six months later it was £135,000.

Other developers have also bumped up prices. Starter homes in Swords Demesne sold out last weekend at prices from £152,500 to £160,000. In Blanchardstown, similar homes in Coolmine Lodge have been increased to £157,000; this weekend, three-bed semis in the latest phase of Manorfields, near Clonee, will be available between £141,950 and £145,000. Last weekend, starter homes in The Old Forge, in Lucan, were priced at £149,500. All 30 units were sold within hours and the remaining 52 houses are being offered for sale this weekend through the Ross McParland agency at £155,000.

Ross McParland acknowledges that prices have increased by between £10,000 and £15,000 in three months.

Gerry Leahy, who also specialises in new house sales, estimates that prices have risen by at least £10,000 since Christmas. "The widely publicised reports that prices are stabilising don't take into account what is happening on the ground. The situation is actually getting worse."

Mr Leahy says that while 500 acres were rezoned for housing in Lucan 18 months ago, there was still no sign of services being provided. It would be another two years before houses were completed on these sites. "The first-time buyers are panicking. They see prices going up and there is no indication that the supply of new houses will be increasing in the foreseeable future."

With the cost of three-bed starter homes quickly going outside the reach of many first-time buyers, some developers are switching to two-bedroom terraced houses and duplexes. Ronan O'Driscoll of Hamilton Osborne King says the three-bed semi will soon be a thing of the past. This weekend, two-bedroom terraced houses are being offered for sale at £121,500 and £123,000 in schemes at Lucan and Clonee.