The shortage of development land in prime locations is pushing up property prices with some areas of Dublin reporting price inflation of over 20 per cent, according to the Institute of Auctioneers and Valuers (IAVI).
"A shortage in supply of large Dublin second hand family homes is pushing prices up further, as three-and- four bedroom houses saw the highest average rate of increase, at over 13 per cent. While average prices of second-hand houses in Dublin increased by 11.3 per cent to 13.5 per cent," said IAVI chief executive, Alan Mr Cooke.
"Some areas saw staggering increases. One member said the largest movement in prices occurred in Dublin 6, which saw median house prices rise by 23.5 per cent," Mr Cooke added.
The IAVI found that a shortage of supply in development land throughout the country pushed up prices further in 2005, as the construction sector this sector once again experienced a bumper year in many areas.
According to the IAVI statistics, housing development site values in Dublin and the rest of Leinster and Munster were up by more than 15 per cent.
IAVI members reported that the shortage of prime development sites in Dublin, is leading to strong price inflation with infill sites increasingly being sought after in the capital as such sites offer the developer an opportunity to build and sell in established areas.
Planning problems encountered by some developers, particularly in Dublin, are also curtailing supply, the IAVI said.
Another factor that increased prices at the lower end of the market was the changes in stamp duty exemption levels at the start of 2005. The increase from €190,000 to €317,500 had the effect of pushing up prices for first time buyers in the greater Dublin area, the IAVI said..
"Towards the end of 2005, some Dublin agents - and indeed those in other cities throughout Ireland - reported instances where vendors put their homes on the market at €280,000 and received first bids of €317,500 as buyers sought to override the opposition by getting to the stamp duty exemption threshold first," the report said.
As in 2004, the rate of increase for residential development land remains higher than rates of increase in the new homes sector, indicating strong confidence on the part of developers in relation to future market demand for new homes.
Prices achieved for farms remain buoyant but this is due to interest from developers and wealthy individuals looking for a slice of country life rather than working farmers.
"IAVI members in some parts of the country note that sales of farmland to working farmers is becoming something of a rarity," the report said.