Seconhand house prices in Dublin continued to fall in the fourth quarter of 2001, according to a report from estate agents Douglas Newman Good. Average prices dropped by 2 per cent to €256,137 (£201,724), the report said.

Throughout 2001, the average price of secondhand property in Dublin fell by 3.5 per cent to €256,137, the first annual fall in prices recorded by Douglas Newman Good's house price gauge. After initial positive growth in the first quarter, prices fell in real terms for the first time in the second quarter and continued to soften in the third and fourth quarters.

"The statistics provide further evidence of the soft landing predicted for the Irish residential property market 12 months ago, and it seems increasingly likely that a market crash or hard landing has been avoided," said Mr Paul Murgatroyd, economist with Douglas Newman Good.

Residential property price rises of 3 to 5 per cent could be achieved over the course of 2002 as competition increases in the market, brought about by the improvement of conditions for investors, he said. But he added that first-time buyers would face stiff competition as investors returned to the market.

The review also predicts that property along the Luas line from Tallaght could rise in value by up to 15 per cent to coincide with the completion of the light rail system, reflecting rises experienced along the DART line and in other cities, which improved or created new transport infrastructure. Similar price rises are expected on the Sandyford line and Metro routes although further research is required.

The upper end of the market suffered most due to the information and communications technology downturn, with property in the lower price brackets faring slightly better as demand remained relatively robust, the review said. The report also said the outlook remained broadly positive as a result of the boost to the residential property market announced in last December's Budget.