The price of a secondhand home rose by just 0.1 per cent in the final quarter of last year, according to figures released yesterday by Sherry FitzGerald, with prices actually falling in Dublin.
However, very strong growth in the first half of the year propelled the overall annual gain to 18.1 per cent, up on 2005's 17.3 per cent increase.
The estate agency's chief economist, Marian Finnegan, said this demonstrated the "exceptional buoyancy" of demand for residential property in Ireland.
"After a phenomenal first six months in which average house prices rose spectacularly, price inflation moderated notably in the latter months of the year - making it in football parlance a year of two halves.
"That said, 2006 was still one of the strongest years on record for house-price inflation."
In Dublin the cost of a second-hand home actually fell in the last three months of the year, slipping 0.66 per cent on the year-earlier period. Over the whole year, however, house price inflation was 22.2 per cent, down slightly on the 23.3 per cent achieved in 2005.
Cork also saw a moderation of price growth in the final quarter, with prices increasing by just 0.6 per cent. For the whole year, the cost of a second-hand home in Cork was up 15.1 per cent.
Ms Finnegan welcomed the moderation at the end of the year, attributing it to a more robust level of supply in the market and six interest rate increases.
According to the figures, first-time buyers accounted for 34 per cent of second-hand home purchases.
Investors were also active, purchasing 20 per cent of the properties on the market, up from 17 per cent in 2005.
Ms Finnegan said that looking ahead to 2007, house-price inflation was likely to slow towards the single digits, though slightly higher figures should be achievable in the main cities.
"Such growth rates may be far from the giddy days of the late 1990s when such growth rates were achieved in a month but they still underwrite a view that residential property offers investors of all types a safe and stable vehicle to invest a relatively small quantity of money and enjoy a very satisfactory rate of return."
