The average price of a second-hand property in Dublin rose sharply by 4.2% during the final quarter of 2002, bringing the total increase for the year to 20.5%, according to figures from estate agent Sherry Fitzgerald.
The company said the pace of inflation in the rest of the country was slightly more moderate at 3.4% bringing the rate of increase in Ireland to 20% for 2002.
Sherry Fitzgerald economist Marian Finnegan said the strength in 2002 could be partly explained by the pent-up demand from the previous year when price levels almost stagnated.
She said the continued strength of inflation in the final quarter of 2002 reflected an increase in demand particularly from investors at the end of the financial year. Before the change in the financial calendar, she said, this accelerated demand would typically have taken place in the first quarter of the year.
Ms Finnegan said 2003 would be 'a year of two halves', with the continued impact of the pent-up demand for property enhanced by the recent reduction in interest rates, fuelling strong demand for property and above trend rates of price inflation in the first six months of the year.
But she said supply had increased considerably in recent years while the slower international economic environment would inevitably reduce purchasing power and dampen demand. Ms Finnegan said the market would slow gradually over the course of the year with price inflation eventually returning to a low double digit level.
