Auctioneer Sherry Fitzgerald expects house prices to rise by 15 per cent this year as rising interest rates will rein in what has been a breakneck start to 2006.
The auctioneer said today that the average price of a second-hand property in Ireland rose by 7.6 per cent in the first three months of 2006.
The Dublin second hand market however was even hotter at 11.2 per cent for the first quarter, bringing the rate of increase to 30.5 per cent in the past 12 months.
"After the exceptional performance during 2005, early indications suggest that 2006 will be a very strong year for the Irish property market," said Marian Finnegan, Sherry Fitzgerald's chief economist.
Ms Finnegan noted that Dublin prices reflected the relative poor supply of new houses in the capital.
"Though just less than 30 per cent of our population currently reside in Dublin only 22 per cent of total completions and 14 per cent of house completions are being supplied to the Dublin market," she said.
"As a result we anticipate that house price inflation in Dublin will continue to exceed the national average in the medium term," she added.
Sherry Fitz's analysis reveals that first time buyers are not been priced out of the market. First-time buyers made up 36 per cent of all the second-hand properties traded and closed during the three-month period.
"The resilient strength of first time buyer demand illustrates the positive impact of the amendments in the rates of stamp duty applicable to first time buyers in the second hand market in Budget 2005. The purchasing power of this cohort has also been enhanced by the introduction of 100 per cent mortgages," according to the report.
"Investors were relatively active during the year to date with preliminary estimates suggesting that they purchased an estimated 20 per cent of the second-hand properties traded and closed during the period. This compares to 19 per cent during the same period in 2005."
An analysis of sellers who traded their properties during the first quarter reveals that 22 per cent sold with the intention of purchasing a larger property.
"This is a very healthy indicator of the robustness of the market," Sherry Fitzgerald said.
Interestingly, 29 per cent of investors sold investment properties, a trend that has contributed to the reinflation of rents seen in 2005.