Dublin house prices are 55 per cent more expensive than the rest of the country, but the booming economies in Cork and Galway are closing the gap, according to a report.
According to new research done by Bank of Ireland the average price of an existing home in Dublin stood at €430,000 in the third quarter of 2005 against an average for the rest of the country of €278,000.
A "capital premium" is not unusual as employment and incomes are normally higher in big cities as is the concentration of high-paying professions and financial services jobs.
"Income in Dublin tends to be of the order of 15 per cent above income elsewhere in the country, which implies that people living in the capital will have a higher debt repayment burden than the national norm," said Bank of Ireland chief economist Dan McLaughlin.
"An additional factor helping to bid up prices in the capital may well be supply or its absence as completions have risen at a much slower pace in Dublin than elsewhere in the country," he added.
According to Bank of Ireland, Dublin's premium status is a relatively recent phenomenon. Since 1976 when the gap was only 6 per cent, Dublin house price inflation has outpaced the rest of the country.
As the Celtic Tiger took hold, the gap widened to 40 per cent by 1996, peaking at 63 per cent in 1998. Since then, the trend has eased with Dublin price increases lagging the rest of the country, so bringing the differential back down to 55 per cent.
But the analysis also shows that Ireland's other cities are catching up on Dublin.
Cork house prices have generally outperformed the national average, leaving the differential in the third quarter of 2005 at just under 40 per cent, albeit wider in cash terms; an average house in Cork city cost €309,000 or €121,000 below Dublin.
Fast-growing Galway is also closing the gap on the capital. The latest figures show a price differential in favour of Dublin of some 33 per cent as the average house in Galway, at €323,000, was some €107,000 below that of Dublin.
Bank of Ireland's research is based on data provided by the Department of the Environment.
