Sherry FitzGerald expects house prices to grow by 12 to 15 per cent this year as the market recovers from last year's downturn.

"Given the strong demand patterns, the group is confident that the outlook for the remainder of the year is positive," chairman Donal Chambers told shareholders at the property services group's annual meeting.

The good trading conditions have allowed the group to declare an interim dividend of 1.5 cents per share, up from 1.0 cent last year.

The decision to announce the dividend early, ahead of the release of half-year figures, took into account the failure to pay a final dividend last year, the company said. The news had no impact on the share price which remained unchanged at €1.05, but will be welcomed by the company's directors who own 30 per cent of the firm.

However, after a tough year in 2001, the group is seeing signs of improvement. The residential property market, which accounts for 40 per cent of Sherry FitzGerald's business, is benefiting from the return of investors to the market in the wake of last year's Budget and strong demand from first-time buyers.

"The first quarter of 2002 saw national house price inflation of 5.5 per cent which, in effect, places house prices back to the level they were in January 2001," Mr Chambers said.

Sherry FitzGerald expects a strong performance in the current quarter before a seasonal slow-down in the second half of the year.

Meanwhile, the slow-down in decision-making seen in the commercial property market is coming to an end, the company said. Activity in the current year is expected to match that of 2001, with the retail and investment sectors likely to be the best performers. The estate agent said it had opened four new franchise offices to date this year, taking the number of branded offices to 77.

Sherry FitzGerald is now represented in 24 of the 26 counties in the Republic, with Offaly and Monaghan being the two exceptions. But the group has plans for a complete nationwide presence and is aiming to have 100 outlets in the next 24 months. It is looking, in particular, at towns like Tullamore, Thurles and Monaghan.

Meanwhile, Sherry FitzGerald expects the loss-making property website, Myhome.ie, in which it is the largest investor, to become profitable over a two to three-year time-frame. Although Myhome.ie lost €400,000 for the group last year, it helped save on advertising costs, Sherry FitzGerald said.