The knock-on effect is that new homes in some areas have increased by as much as 15% since January. Which means overnight queues are set to become a feature once again of the housing market in the capital. And while new home starts are higher than ever nationally, expected to reach 85,000 by the end of the year, the Dublin new homes' market cannot keep up with demand.

"Supply in Dublin has never been so low, " says Ken MacDonald of Hooke & MacDonald. "The 2,500 planning permissions that were reversed in the last quarter of 2005 by An Bord Pleanála, should be homes selling on the market now, but instead there is very little out there for buyers.

The people making these decisions need to realise the connection between their decisions and the market. If supply goes down, but demand remains strong, prices will continue to rise, and the people most affected are the firsttime buyers, " claims MacDonald, adding that new home starts in the Dublin area alone are down by 16% already this year, while overall planning permissions in Dublin dropped by 45% from 24,196 in 2004, to 13,233 last year, with Dublin City and South Dublin suffering from the biggest decrease in supply.

"There is a dramatic shortage of new homes coming to the market and this shortage is most acute in Dublin, " agrees Ross McParland of Sherry FitzGerald New Homes.

"The supply of new homes in Dublin is falling well short of demand. We estimate that only 70% of what's actually required in Dublin is being built. The planning authorities need to take corrective action to address this imbalance as their efforts to date have been proven to be inadequate, " says McParland, adding that they have 15,000 potential buyers on their database, 45% of whom are looking for homes in South Dublin, 34% seeking homes in North Dublin, and the remainder looking for something in the Greater Dublin area. "There is huge energy in the market and the year started with great anticipation for the buyers but so far there's been grave disappointment."

Ronan O'Driscoll, Director with Hamilton Osborne King New Homes, believes it's a combination of factors causing a shortage in Dublin. "We've seen prices for new homes rise by up to 15% already this year, compared to increases of between 5% and 6% during the same period in other years. Demographics, immigration, and SSIA money are all causing pent-up demand for homes and significant delays and refusals in planning permissions are all adding to the shortage. So sadly we probably will be seeing queues forming once again for new homes, as it's the only fair way, " explains O'Driscoll, adding that the Irish market is unique. "Look at the Adamstown development in Lucan, Co Dublin, where 600 units on one site sold out over one weekend. In Global terms that's unheard of."

But Dan McLaughlin, Chief Economist with Bank of Ireland, believes that housing supply has never been better than in recent years. "By the end of this year we expect that 85,000 new homes will have been built in Ireland. The shortage is really a Dublin issue, and what it tells us is that we've underestimated employment growth and immigration. Only 22% of the 81,000 new homes built last year were in Dublin, which is where the demand seems to be. I suppose people will just have to accept that living in or near the capital is going to cost a premium, " says McLaughlin, estimating that, overall, new home prices will rise by around 11% this year.

But it's not just the city which is experiencing a shortfall, with residential schemes in the commuter areas also seeing massive interest.

During the last couple of weekends Coonan Real Estate Alliance sold out two new schemes, Ryebridge in Kilcock and Louisa Park in Leixlip, before the official launch date.

"We were booked to release 40 houses at our Ryebridge development in Kilcock on the Saturday, but the queues started forming on Thursday, and by Friday morning there were more than 40 people who had spent the night in their cars. We felt it would be wrong to let them sleep out for another night, so we sold the houses to the first 40 buyers that day, " explains Will Coonan. A similar situation occurred the weekend they launched Louisa Park in Leixlip, and again they sold the units earlier to the first 30 buyers in the queue.

"There are several big sites in the West Dublin area that have been trying to get planning permission for a couple of years, but nothing has gone through yet, so there is definitely a big shortage of new homes. We have a lot of demand around this area because we're close to Intel and Hewlett Packard, and homes tend to be better value than in the city. But prices are rising here too, " says Coonan, adding that two-bed apartments in Leixlip recently launched at �?�320,000, strong prices for Kildare property.

And Leixlip-based agent Gerry Leahy agrees that the shortage is having a knock-on effect on homes further out in areas like Rush and Blessington. "First of all, new homes are selling quicker than ever before and then demand is higher than ever, so in general supply is down, " says Leahy. "Every scheme that sells out means one less scheme, and one less piece of development land that is available. Over the last couple of years, a lot of the buying in Dublin city was absorbed by massive schemes in the Docklands. But now these are sold and there isn't another big land mass like the docklands to come on the market, " adds Leahy.

But with so much demand for starter home properties and a scarcity of sites, perhaps the debate about going high-rise in the city centre needs to be aired once more.