The pace of house price inflation eased significantly in 2003, according to a report from estate agents Sherry FitzGerald.
The report shows the average price of a second-hand property in Dublin rose by 1.8 per cent during the final quarter of the year bringing the total increase for the year to 12.4 per cent. This compares to a growth rate of 20.5 per cent for 2002.
The pace of inflation in the country as a whole was slightly stronger at 2.1 per cent or 14.6 per cent for year compared to a total growth rate of 20 per cent in 2002.
Sherry FitzGerald economist Ms Marian Finnegan said the pace of inflation has "moderated gradually as the year progressed reflecting the impact of strong construction activity and the gradual relaxation of the lagged demand from previous years.
"That said, the overall level of inflation recorded for the 12 months to December 2003 still remains above trend reflecting the impact of the very competitive interest rate environment and the underlying attractiveness of investing in the residential property market," Ms Finnegan said.
The report said first-time buyers remained the "key ingredient in overall demand", accounting for 33 per cent of all the second-hand properties traded in 2003.
Investors purchased an estimated 21 per cent of the second-hand properties traded and closed during the period.
Ms Finnegan said the strength of construction activity in recent years is allowing the market to gradually progress towards equilibrium.
"With construction output levels averaging 60,000 units, Ireland is meeting its annual requirement for new property," she said.
"However, the backlog of demand from the Celtic Tiger era will mean that it will be a number of years before overall equilibrium is achieved, a factor that will underwrite the stability of the market in the medium term.," she added