Average price of second-hand home in Dublin increased by 19.5% to almost €373,000 last year, writes Tim O'Brien, Regional Development Correspondent
House buyers borrowed a massive €17.4 billion from the State's lending agencies last year as the average price of a second-hand home in Dublin rose dramatically by 19.5 per cent to almost €373,000.
The increase in new house prices in the capital was just under 14 per cent, bringing the average price for which loans were approved to more than €303,000.
The rises were mirrored across the State with annual average house price increases of 16.3 per cent for second-hand and 13.4 per cent for new homes.
The rises are bad news for the Government which had hoped that at 68,819 the record number of new homes built in 2003 would ease inflation in the housing market.
According to statistics released by the Department of the Environment yesterday, the rise in prices actually accelerated in 2003 despite the record housing output.
The statistics, contained in the Annual Housing Statistics Bulletin 2003, also reveal that the largest single group of buyers of both new and second-hand houses was the professional and managerial class who received 41 per cent of all loan approvals from the banks and building societies.
In contrast, farmers and fishermen together accounted for just 0.7 per cent of buyers. Unskilled manual workers accounted for 12.4 per cent of purchasers while skilled and semi-skilled manual workers accounted for 21 per cent. Salaried non-manual workers accounted for 24.7 per cent of lending.
For second-hand houses the next most expensive city after Dublin is Galway at €268,334, followed by Cork at €249,138. Second-hand homes averaged €211,090 in Limerick and €210,181 in Waterford. The "other areas" average was €227,260
For new houses the ranking of the cities is slightly different with Dublin's €303,193 being followed by Cork at €233,465 and Galway at €231,657. In Waterford the average was €205,703, in Limerick it was €201,615. The "other areas" average was €213,494.
Responding to questions on the Government's strategy to reduce house price inflation, a spokesman for the Minister for the Environment, Mr Cullen, said yesterday the strategy of increasing housing output would still work.
Describing it as a law of "supply and demand" the spokesman said increased availability of houses would ultimately lead to lower prices for those seeking new homes. He also said the availability of more new houses would reduce the rentals currently being secured by landlords and therefore discourage a glut of private investors in the market.
The Minister of State for the Environment, Mr Noel Ahern, said: "It is important that the momentum that has been achieved in the house building sector is maintained and that the supply of housing continues at a high level."
Labour Party spokesman Mr Eamon Gilmore said the figures demonstrated "in stark terms" the scale of the problem facing working couples trying to buy a home of their own. "A couple in Dublin would now need a combined income in the region of €100,000 per annum," he said.