Property inflation set to lose pace

Property price inflation will fall this year to 8-10 per cent from 16 per cent in 2000, according to listed-estate agency Sherry FitzGerald. Describing the market as in a "period of transition", its chief executive Mr Mark FitzGerald said such a rate of price increases was sustainable. He said there was still a fundamental need to increase the supply of property.

The group reported a 57 per cent rise in revenues to €27.23 million (£21.45 million) last year from €17.36 million in 1999, but its pre-tax profit rose just 26 per cent to €4.12 million (€3.24 million) from €3.27 million. Its shares lost 9 per cent, closing 18 cents weaker at €1.82 following the results.

Mr FitzGerald signalled a decision to sell fewer homes at auction. He denied this was caused by weakening demand and claimed perceptions of the market's performance were distorted by reports of failure to sell at high-value auctions.

Properties worth in excess of £2 million were not economically relevant in the context of a market in which the average property price since the start of the year was £203,000, he said. While property of "distinctive scarcity value" would always go to auction.

Finance director, Mr James Barrett, attributed the fall in pre-tax profit margins - down to 15 per cent from 19 per cent in 1999 - to investment in its mortgage intermediary business, Mortgage Insight. The group was targeting margins of 19 per cent in the current trading year, he said.

The development of Mortgage Insight and joint ventures meant the group would reduce its dependency on the second-hand residential market in Dublin. It plans to introduce its mortgage business in Northern Ireland next month.

About 42 per cent of revenues came from the second-hand business, down from 58 per cent a year earlier. After-tax profit was €2.28 million (£1.80 million), up from €1.97 million. Earnings per share rose to 31.65 cents from 15.91 cents. That included an exceptional gain in excess of €2 million due to the disposal of a premises at Windsor Place in central Dublin. It proposed a final dividend of three cents per share.