Estate agents across the Republic of Ireland expect residential values to continue rising in 2007 but ‘more modestly’ than last year, the Irish Auctioneers and Valuers Institute has reported.

IAVI’s annual property survey confirmed that 2006 was a year of two halves in the Irish property market with Dublin auction prices rocketing in the first half of the year but 82 per cent of houses being withdrawn from auction in the second half.

’2006 was an amazing year for residential property, with unprecedented growth of as much as 25 per cent in the upper end of the Dublin auction market in the first quarter, said IAVI chief executive Alan Cooke. However, this was ‘followed by effective stagnation in the autumn, with widespread withdrawals at auction, as a consequence of overly optimistic price expectation on the part of vendors and uncertainty surrounding the levels of stamp duty that emerged in the autumn in the run up to the annual Budget.

‘Outside Dublin, this contrast was present in most areas, but was not so drastically demonstrated. Growth in residential capital values for 2007 is expected to be a modest 4 per cent to 5 per cent’.

According to IAVI new detached homes in Dublin increased in value by about 10 per cent in 2006, while comparable homes in the ‘rest of Leinster’ category went up by as much as 12.8 per cent.

‘Sites are increasingly scarce in Dublin City proper and the higher level of price growth in the surrounding counties reflects the "doughnut" nature of development around the capital.

‘In Munster growth in the value of new houses eased slightly compared to 2005 but still clocked in at a most respectable 9.2 per cent to 10.9 per cent. In Connaught price growth for new houses ranged from 7.7 per cent to 9.4 per cent and was generally ahead of 2005 levels’.

In the existing homes market the ‘rest of Leinster’ was the best performer with the reported level of price increase rising slightly from 2005 to between 9.7 per cent for detached houses and 12.6 per cent for three bedroom semi-detached houses. In Dublin price increases in the existing home market were approximately 11 per cent in the ‘key’ three and four bedroom categories – which was down on 2005.

Meanwhile rents were also going up with 2006 ending 6.3 per cent up on the year in Dublin, 6.2 per cent up in Munster, and around 3 per cent elsewhere.

IAVI said its members expect residential rents to grow in Dublin and Munster by between 3.7 per cent and 2.7 per cent in the coming year. ‘This would be a retreat from the 2006 growth levels of 6 per cent plus and may prove unduly conservative given the huge levels of inward migration.

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