Second-hand property prices up 13.1 per cent

The average price of a second hand house in Ireland rose by 2.5 per cent in the final quarter of 2004, according to estate agents Sherry Fitzgerald.

This brings the total increase for the year to 13.1 per cent, compared to 14.6 per cent in 2003 and 20 per cent in 2002.

However, inflation in Dublin's second-hand market was 3.4 per cent for the final quarter, bringing the rate of increase to 16.6 per cent for the year. This compares with 12.4 per cent in the previous year.

Marian Finnegan, chief economist with SherryFitzgerald Group, described 2004 as a "surprisingly resilient period of growth" for the property market.

"The pace of inflation did ease somewhat as the year progressed with indications that the market was beginning to absorb the impact of increased supply. That said, the very competitive interest rate environment combined with the underlying strength of owner occupier demand facilitated above trend price inflation for the 12 months to December 2004," said Ms Finnegan.

First-time buyers are still a strong presence in the market, buying an estimated 36 per cent of second-hand properties traded and closed last year, while investors accounted for 20 percent.

According to Ms Finnegan, price inflation in the property market is expected to average 10 per cent in 2005. Most of the price growth is expected to take place in the middle to upper end of the market.

However, the change in stamp duty for first-time buyers is expected to increase interest from first-time buyers in the market in 2005 and may put upward pressure on prices as buyers use the money saved on stamp duty to increase their offers.

"Overall though the long term trend of moderating house price inflation should continue into 2006 and beyond with the maturing market facilitating a restoration of single digit growth in the medium term," she said.