House prices to rise by 9 per cent in 2005

The Irish house prices boom is continuing at a record rate,  new figures released today show.

According to the permanent tsb/ESRI House Price Index, prices rose by 8 per cent in the first eleven months of this year. The average price of a house countrywide is now €275,000.

The rate is a slight decline on the 8.4 per cent growth in the same period in 2004. However, growth slowed in the second half of last year, whereas it is accelerating this year.

The second half of this year saw prices shoot up by 5.4 per cent, compared to a relatively sluggish 2.6 per cent in the previous six months. permanent tsb predicts the final rate for 2005 will come in around 9 per cent.

The greatest growth was in the first-time buyers' market, with prices growing by 12.1 per cent over the first eleven months of this year compared to an increase of 7.1 per cent for other buyers.

First-time buyers are paying an average of just over €248,00 to get their feet on the property ladder.

Dublin house price rises continue to outstrip those in the rest of the country, with the figures for the year to November at 9.2 per cent and 7.8 per cent respectively.

The average price paid for a house in Dublin in November was €365,562, compared to €237,149 outside the capital. In the same period last year, the corresponding figures were €333,617 and €220,741.

Niall O'Grady, head of marketing at permanent tsb bank, predicted prices would continue to grow next year at similar levels to that seen this year, with continuing strong demand and strong employment growth buoying prices.

"The recent interest rate rise and the potential for further rate rises may impact to some degree as the year goes on, though there is no reason to suggest that this will have any dramatic impact on demand for the foreseeable future," he said.