More clustered housing is needed to tackle the Island's affordable homes crisis, according to realtor Scott Powell.

The Island needs to "think outside the box" and build more of these units, especially in town centres, he told Hamilton Rotary Club.

He said the one spot of good news was that more condominiums are being built, which may take some of the strain out of demand for family homes.

Mr. Powell was speaking as Coldwell Banker JW Bermuda Realty was offering a two bedroom house in Smith's for a staggering $12,000 a month, and a four bedroom, four bathroom, two half bathroom home in Southampton for $21,000.

Mr. Powell said the cost of an average single family home has jumped from $725,000 in 2001 to $950,000; the average duplex has risen from $615,000 to $720,000 in the same period; and a typical condominium now costs $700,000 as opposed to $430,000 two years ago.

"What we need is more supply of middle-market homes. Renters and buyers are having to look at bigger properties because of the shortage in the size accommodation they need," he said.

"There are no `silver bullets'. Condominium and duplex development and redevelopment are part of the answer.

"The most affordable category of accommodation remains the condominium. Developers are able to finance them without the pre-lease signing required of a commercial development.

"The resulting good news is that there continue to be smaller clusters of development of six to ten units in residential areas and some larger developments (Skytop, Harmony Club to Belmont) either under construction or in the pipeline.

"This raises the possibility that purchase prices and rental rates for this type of accommodation could stabilise in the future."

Coldwell Banker rental representative Vivienne Power said there were good reasons for the $12,000 rent for the two bedroom property and the $21,000 for the four bedroom house.

Mainly it is because landlords, who have requested those prices, have found people willing to pay in the past.

"A lot of it is based on what the landlord wants and in the case of the Southampton rental they've gotten that price at one time.

"Everyone has an individual reason for the amount they charge for rent," she said. "If there are people who are willing to pay it they aren't going to drop that price," she added.

She also said that location still played a large role in rental prices and she mentioned the two houses were both in good locales.

"It still all depends on location and the Smith's rental is a penthouse at the new Palmetto Gardens site where a hotel will be built so there will be a pool there.

"It seems drastic, the jump in price from $12,000 to $21,000, but the Southampton residence is on the waterfront and it is very pristine."

A third reason causing some landlords to keep high prices might also come from the rise of reinsurance companies on the Island. Ms Power said the benefits workers at companies, like those who work in the reinsurance business, could include allowance for rentals.

"There was a trend of reinsurance companies coming to the Island after 9/11 and workers get the benefit of a good housing package. So naturally the rents are going to be higher.

"Landlords feel they've worked hard all their life and so they're going to keep that price if people will pay for it regardless of who it is that wants to rent the property."

Ms Power said there were still a good amount of rentals in the middle ranges and that as is always the case there is more demand then supply for rentals in the lower price range.

"August is a slow month so it is a bit unfair to make a statement about whether rentals prices are increasing but right now we have a lot of listings and a lot of interest just not as many in the lower ranges."