The price of second hand houses in Dublin rose by 13%, according to Douglas Newman Good's residential property review for 2004. This compares to a figure of 10% for houses nationwide.
The average price of a second hand home in Dublin city is now up to €383,000.
Homes close to Luas lines in Dublin saw an additional 15% price rise over and above the general increase in prices during the years from 2002-2004.
Douglas Newman Good said the price increases last year were higher than initially expected due to strong trading in the first and final quarters of the year, due to the changes in stamp duty for first time buyers of second hand properties.
'By far, the strongest sector was the mid to upper end of the market where prices increased by 22% compared to the average increase of 13%,' commented Paul Murgatroyd, Economist with DNG.
'Demand for large family homes as people traded up far outstripped supply which put increased upward pressure on prices,' he added.
He said that prices in the starter home market increased by less than the average at 8%, reflecting the increased levels of supply in both the new homes and second hand markets. 'This stabilisation of prices at the lower end of the market can only be good news for those people trying to get on the property ladder,' the economist said.
DNG's review also highlighted the fact that infrastructural improvements across the country had helped bolster demand in towns and cities which had benefited from development. Towns now considered part of the Dublin commuter belt, such as Mullingar, Athlone, Tullamore and Wicklow, saw prices increase by 15% as locations benefited from improved transportation links with Dublin.
On the Luas effect, Mr Murgatroyd said that it is evident that homeowners close to the new tram system have seen their properties rise in value faster than elsewhere.
'The southside has done particularly well in recent years with the extension of the M50 progressing, Luas coming into operation and the more recent Dart upgrade works. We feel that similar developments to the north of the Liffey are long overdue, particularly a rail link from the city centre to Dublin airport,' he said.
The estate agents forecast that prices are set to rise by 9% in the year head, but as with last year, different sectors will see greater returns than others.
DNG says that in the year ahead, trading-up in the market will continue to be attractive as interest rates are not expected to increase until later in the year.
'In addition, all the economic indicators are positive with unemployment set to fall further and net immigration forecast to add around 30,000 people to the population during 2005,' the review added.
