The average price of a house in Bermuda has risen to nearly $1 million as buyers scramble to buy their own piece of the rock.

The demand for houses has so outstripped supply that prices continue to rise and rise, taking the average cost of a house on the Island to close to the million mark - breaking record after record.

This combined with the lowest interest rates seen in decades and a poorly performing stock market have made property a good place to put money and a get a good return on investments.

Two separate estate agents have compiled data of houses bought and sold so far - JW Bermuda Realty have put the average price of a house at $965,000 and Rego Realtors at $988,183.

According to JW Bermuda realty the average cost of a single family house stood at about $870,000 in 2002, but the price has gone up by 10 percent in just six months. Details of their latest report - from which this data is taken - will be available at the end of the month.

Rego Realty put the average cost for residential at $988,183 during 2002 in their State of the Market Report for Spring 2003, adding that the sector continues to boom in 2003.

During 2002 the total of all residential sales was $162 million and the average price for condos was $520,269 and land was $423,611.

Rego reported that on the outlying areas of the Island the average cost of a home was roughly $700,000 and in Smith's it was $1,600,000 - with the average cost of a condo in Smith's running at $847,000.

The market is hitting first-time buyers particularly hard - with young families struggling to be able to afford their first home.

"The basic problem we have is we have buyers and no properties to sell," said Barbara Trimingham, partner at The Property Group. " We need properties to sell."

She said that there were people wanting to upgrade and people wanting to downgrade, but not enough on the market to cater to demand.

"The prices are about $900,000 and up in central parishes.

"Basically there is more demand than supply - and prices keep going up. If something is reasonably priced, it goes right away," added Mrs. Trimingham.

But there is hope on the horizon, with dozens of new projects scheduled for completion within the next two years - adding to the housing stock on the Island.

"There is quite a lot of development on the Island at the moment, either under construction, or planned for construction and these developments will help with people looking for downsizing and for first homes."

Developments include the Belmont, Tuckers Point, Orchard Beach, Whale Watch, Harmony Club, Surfside and Skytops. Mrs. Trimingham said the new apartment developments in Hamilton would be popular with business people who come and go, but would not be much use for most of her clients.

"A lot of people - in fact most people - still want a house with a garden," she said.

Susan Thompson, sales manager at JW Bermuda Realty, said that the property market was extremely difficult for purchasers at the moment.

"There are more people buying houses than there are houses to buy," she said.

"This inevitably causes the house prices to escalate - and they have been doing this steadily over the past two years. Some of the developments being built over the next two years will alleviate some of the pressure."

She said that the shortage in housing was only part of the equation - with low interest rates and the stock market crash making property look like a good investment.

"More and more people are putting their money into buying property. The stock market is so bad at the moment - you can make more money by buying a property and renting it out.

"It is difficult for first time buyers, but the new developments which will be on the market in the next 12 to 24 months should help alleviate the situation."