House prices in Dublin fell by 10 per cent on average last year, and estate agents forecast a further decline of about 4 per cent in 2008.
Apartment owners fared even worse, with the price of secondhand apartments in the capital falling by as much as 17 per cent.
The annual price survey of the Irish Auctioneers and Valuers Institute (IAVI) finds that as many as 40,000 apartments in Dublin lie vacant, "causing concern that prices have some way to correct before activity is restored and prices are stabilised".
The price falls recorded by IAVI members effectively wiped out all the gains made by the market in 2006.
Activity levels in Dublin fell by between 15 and 60 per cent, depending on the market segment.
Aside from apartments, prices for homes at the higher end of the Dublin market - between €4 million and €7 million - felt the pinch, achieving prices that were down 20 per cent on the year before.
The report states that "members are unanimous in agreeing that this reflects a correction of unrealistic price levels during 2006".
Estate agents outside Dublin suffered also, though prices did not slide as badly as in the capital.
The value of residential sites dipped by between 10 and 15 per cent outside Dublin, and by 16 to 19 per cent in the capital.
Rents, however, continued to rise, according to the IAVI data, increasing by between 3.3 and 4.2 per cent across the State.
IAVI president Robert Ganly was upbeat on the results of the survey. "Overall, I would say to people that the market is beginning to stabilise. The worst is over."
He expects the absence of further rises in interest rates and the reformed stamp duty regime to provide some support, alongside "strong latent demand from young couples who put off purchasing in 2007".
While prices would continue to fall in 2008, "this levelling off should begin to reverse itself in early 2009, and we would hope to see the property market growing again some time during that year".
However, the report says investors are likely to be more cagey about re-entering the market, limiting growth rates in prices in the immediate future.
Mr Ganly said the impact of the Government's stamp duty reforms had yet to be felt.
"We feel that these will have a measurable, positive impact on the residential market, although there is more that the Government could do to help other sectors."
