The country's leading estate agents have strongly criticised the "doom and gloom pundits" of the ESRI for claiming that house prices are overvalued by 15 per cent. They said that, while property price inflation has slowed, house prices will continue to increase, albeit at a slower rate.
At the annual conference of the Irish Auctioneers & Valuers Institute (IAVI), chief executive officer Alan Cooke asked: "How many times has the ESRI cried wolf?" He said the "market is slowing down, but that is not a crisis". He added that "value is based on supply and demand and demand is still there with the economy continuing to grow".
The IAVI, which represents more than 2,000 auctioneers, estate agents and valuers, was meeting in Kilkenny at the weekend, where its incoming president, Robert Ganly, said the housing market was now "stable and realistic" and "much safer than a year ago when price escalation was out of control".
However the Government's failure to resolve uncertainty over stamp duty is "making buyers hesitant and driving money out of Ireland". Mr Ganly said it was "unacceptable" that a family home in Dublin could attract a stamp duty rate of 9 per cent and criticised Fianna Fáil for "turning their backs on the issue".
"Cutting stamp duty could actually increase Government revenues," he added, citing the example of the halving of capital gains tax from 40 per cent to 20 per cent, which had led to a significant increase in Government revenues.
Mr Ganly also called on the planning authorities in south Dublin to allow more development to alleviate "a severe shortage of three- and four-bedroom family houses" and claimed "there is not enough serviced land nationwide".
Michael Grehan of Sherry Fitzgerald said "house buyers are being more cautious and are more price-sensitive, but demand is still there and would be much stronger if stamp duty was not at such penal rates".
Ken MacDonald of Hooke & MacDonald described the ESRI analysis as "seriously flawed" and said it bore "no relation to how the housing market is actually performing".
He said "price moderation is mistakenly seen as a sign of weakness rather than a sign of long-term sustainability".
Wade Wise, a director of Savills HOK, said that while "the market has slowed, prices are not overvalued and people will look back in six or nine months and think 'we should have bought'." He expected house prices to increase by at least 3 per cent this year.
EU commissioner Charlie McCreevy, a guest speaker at the conference, declined to comment on the IAVI's views, saying that it would be "inappropriate in the run-up to an election".
Visiting Kilkenny for a separate engagement, the Tánaiste, Michael McDowell, told The Irish Times that "the present structure of stamp duty is unfair and not sustainable in the long term". He confirmed the PDs would campaign "to end the payment of stamp duty for first-time purchasers".
