A severe shortage of supply in the market should be the main focus of a study about to be initiated into the causes of rising house prices, estate agents said yesterday. Peter Bacon Associates, economic consultants, were appointed yesterday by the Department of the Environment to undertake a study of the factors underlying recent increases in house prices, particularly in the Dublin area.
Estate agents confirmed yesterday that second-hand house prices in the capital will have risen by up to 30 per cent by the end of the year, while new houses cost 20 per cent more than they did a year ago.
Mr Peter Bacon, who acted as an economic adviser to the Taoiseach, Mr Ahern, when he was Minister for Finance, is expected to complete his report in four months.
He has been specifically asked to:
identify and evaluate the factors influencing the increase in house prices since January 1st, 1994, with particular emphasis on the Dublin region.
assess how the various factors operate in relation to house prices in different areas and different segments of the house market.
evaluate how, and to what extent, these factors or other developments are likely to operate in relation to house prices in the medium term.
assess the implications of likely future developments in relation to the affordability of housing.
The Minister of State for the Environment and Local Government, Mr Robert Molloy, said the study should address all relevant factors, including the procedures of lending agencies and development aspects such as zoning and housing density.
Estate agents insisted yesterday that higher-density housing developments could take place without affecting the quality of life of those who lived in them. "The quality doesn't have to suffer at all," said Mr Ken MacDonald, managing director of Hooke & MacDonald.
"With higher density there's a need for better design. That has been achieved in America and other European countries," he said.
