Fears that the housing market in Northern Ireland was starting to overheat have been alleviated following the release of figures showing the rate of house price increases is slowing down. House prices during the second quarter of 1997 increased by 10.66 per cent over the same period last year, according to the latest Quarterly House Price Index. In the previous year, the rise was higher than 15 per cent.

One of the authors of the report, Dr Stanley McGreal of the University of Ulster, said there was a more variable performance over the past three months when compared to other quarters.

There was evidence of a slowdown and the rate of increase is expected to fall further. The research, which is sponsored by the Ulster Bank and carried out by the Centre for Research on Property and Planning at the university, showed that the biggest price rise was for detached bungalows, with average price levels up by 18.04 per cent.

Dr McGreal said the new ceasefire might not have any major impact because the housing market had been performing consistently well since before the last ceasefire. "If we were talking about a political settlement, more than a ceasefire, then that could give added impetus to the market because it would likely be underwritten by a substantial funding package," said Dr McGreal.

He said the interest rate increase of 1 per cent since May could also be absorbed.

However, Mr Simon Brien, a partner with Eric Cairns estate agents, said he saw little evidence of a slow-down. In certain areas such as South Belfast and North Down prices were still increasing by up to 15 per cent.