House prices throughout the State and the North continued to rise this year, although at a slower rate than in 1998, the Irish Auctioneers & Valuers Institute said yesterday. Rises in the price of second-hand homes in urban and rural areas outpaced price increases in the new homes sector, an IAVI survey said.
In urban areas, the price of second-hand homes rose, on average, by 17 per cent this year, down from an average rise of 20 per cent in 1998. Average second-hand home prices in rural areas rose by 19 per cent since January, down from 26 per cent last year.
Prices paid for new urban homes rose on average by 16.5 per cent this year, compared with 18 per cent last year. In rural areas, average new home prices rose by 15 per cent since the beginning of the year, down from 20 per cent last year.
The IAVI said its survey of 500 auctioneering firms in the 32 counties showed that measures introduced by the Government to curb house price inflation in the Republic were having an effect, but this was disputed by Opposition parties.
"Although the rate of increase is still historically very high, the rate is lower. The supply side clearly has not been fully redressed, particularly in Dublin, but the panic seems to have gone from the market," said the IAVI's chief executive, Mr Alan Cooke.
"Bacon, by and large, is working," he said in reference to measures introduced by the Government after it received two reports on the property market by consultant, Dr Peter Bacon.
Mr Cooke said the present rate of year-on-year increases was not sustainable. "You can't go indefinitely with annual price rises of 15 per cent. It has to plateau."
Asked when this was likely to happen, Mr Cooke said: "It certainly won't happen in 2000 and it's unlikely to happen fully in 2001." He agreed with a suggestion that tax reductions and concessions introduced in the Budget would fuel price increases in the market. Mr Cooke added that property values were unlikely to plummet when the market reached saturation.
"We don't have the same boom-bust scenario as you can have in southern England," he said.
Labour's environment and local government spokesman Mr Eamon Gilmore said the Government's initiative to relieve pressure on the property market was not working. Fine Gael's spokesman, Mr Brian Hayes, said he was not surprised by the continuing rise in house prices.
But a Department of Environment spokesman rejected suggestions that the Bacon measures were not working.
Mr Cooke said the Government's decision to set aside 20 per cent of residential housing sites for "affordable/social" would fuel further price rises. "All that will do is take sites away from the private sector at a time when we're screaming out for them."
He said consumers were "rationalising" the residential property market in a different way. "They're accepting commuting distances that their parents would have been horrified at."
Mr Cooke said it was crucial that public transport and road infrastructure systems improved to facilitate such commuting.
The IAVI survey said the average price of three-bedroom semi-detached second-hand homes in Dublin rose by 21 per cent this year, while the average price of similar sized new homes rose by 17 per cent. The cost in the State of sites for houses rose by 24 per cent this year while the price of sites for residential apartments rose by 22 per cent. Residential and commercial rent costs also rose. The IAVI said residential rents in Dublin rose by 15 per cent since January, down from increases of 24 per cent recorded in 1998.
On commercial rents, the IAVI said values rose by up to 20 per cent and up to 30 per cent for third generation and Georgian buildings in central Dublin.
Prices paid for sites for industrial use rose by 27 per cent in Dublin and by 20 per cent in the rest of the State.
