It has been a favourite destination of discerning holidaymakers for many years now, and Dunmore East, Co Waterford, continues to maintain its particular charm against mounting odds. Some locals fear, however, that this "quiet, unspoilt fishing village" - still unspoilt, but no longer so quiet - is in danger of losing its allure to the economic boom.

Despite a dramatic rise in building development which shows no sign of abating, young local couples cannot compete with wealthy Dubliners prepared to pay astronomical prices for homes required only for holidays or occasional weekends.

Houses in the area are more expensive than anywhere else in the south east, according to Waterford estate agent Don Palmer, who says the market is "all Dublin-driven".

Compared with the pace of development at other seaside resorts such as Tramore and Courtown, the expansion of Dunmore East, it should be said, has been relatively modest. The core village remains as picturesque as ever, but all around it green fields have disappeared, or soon will, as new estates go up.

A village of just 200 houses 20 years ago, it now has 500 and planning applications for a further 150 are in the pipeline. Of particular concern to some is the fact that many of the 150-odd houses completed in recent years were purpose-built holiday homes.

Local Fianna Fail county councillor Geoff Power says the character of Dunmore East has been damaged. "I have no problem at all with people building residential homes and coming in to live in the village."

But he did have a difficulty with holiday homes which were idle for much of the year and "don't bring an awful lot to the local economy". These houses had been built in areas which were zoned for residential development before the boom in holiday home building had begun, he added.

There appears to be little danger, however, of Dunmore East becoming swamped by such developments, as has happened elsewhere. Jean Kelly of Dunmore Holiday Villas says the holiday homes were built under BES schemes which end this year. Only one project, at Pine Grove, remains to be completed.

"Most of the houses now being built are residential," she says.

Yesterday's residential homes, however, are today's holiday villas. Mr Palmer has two bungalows for sale in Coxtown, on the outskirts of the village, which he has no doubt will be purchased as holiday homes. They both have sea views and come with respective price tags of £240,000-plus and £200,000-plus.

That's 20 per cent more than they would have cost last year and double the price of five years ago, he said.

Brendan Gallagher, owner of the Ocean Hotel, says the influx of extra tourists has been good for business, but he accepts that the building boom may not "be the ideal scenario" for the village as a whole.

"The visitors do come out and spend money, particularly in the shoulder spring and autumn seasons when we get a lot of British visitors who eat out every night. Some Irish people, it's true, will fill their bags at their local supermarkets before they leave home."

A commonly-expressed worry about the current scale of development is the lack of a proper sewage system in the area. Denis McCarthy of Waterford County Council's planning section said the pipe network was adequate, but admitted a modern treatment plant was needed.

Raw sewage is currently discharged into Dunmore East harbour, albeit into deep water in its farther reaches. One of the village's two beaches has lost its blue flag, but the other, 50 yards away, has retained this status.

Moves to have a treatment plant built are in train, says Mr McCarthy, but it will be some time before it is in place. A preliminary report on the need for such plants in Dunmore East and a number of other villages in the county is being prepared for the Department of the Environment and Local Government.

In the meantime, building will continue apace. The biggest of the new developments in the pipeline is a 61-house scheme planned by McInerneys at Horse Quarter, on the Waterford approach to the village. Planning permission was granted for 36 of these houses and an application for an increased number is now with the council.

Mr Palmer said this development may have a calming effect on prices.

The harbour at Dunmore East, Co Waterford, a village where local people are being squeezed out by high house prices