MarketView: The property market is not about to collapse, instead things are just returning to normal, writes Michael Grehan

Empty auction rooms and rising interest rates can only mean one thing - the bubble is perched on that precarious precipice.

It's over, we're all doomed, so let's batten down the hatches in the hope that the marauding bear economy doesn't come crashing down on your leafy suburb.

Or will it? How many times, in the past few years, have you heard that the market is about to burst and that the good times are over? If you had a grand for every negative analysis you'd be the proud carrier of a hefty deposit for a period property in Dublin 6.

But let the facts speak for themselves: the facts are that 2006 will go down on record as one of the most successful to date. What's actually happening is that, while the market is levelling out, prices are still increasing but at a more sustainable pace. Instead of creating anxiety in the market, this should, in fact, be instilling confidence.

The good news is that the buyer is much more likely to end up with a property in their preferred location in the present climate. The problem, previously, has been the lack of choice over the last couple of years, and it's the first time in a long time that buyers have had more options and time to consider their purchase.

There has been a lot of hype about houses not selling at auction and this is not a sign of decline but more that the market is steadying. Success rates typically fall in the autumn season as stock levels rise. This year the trend is more pronounced because of higher-than-usual stock levels. While auction sales account for less than 2 per cent of market activity, the perceived lack of activity in this area has sent alarm bells ringing in all directions. The reality is that people appear to have turned their back on auctions, as they don't feel the need to put themselves under such pressure any more in this buyer-friendly market.

Principally, they feel that there is far less room to negotiate in an auction room and the lack of bridging loans available has also impacted on the buyer, forcing them into a position of making a sale before they can purchase.

Basically, the property market is returning to normal and is far from crashing. It was unusual for a market with such strong demand to endure such limited supply for so long with the resulting price increases. With the very competitive interest rates of recent years, many people trading up held onto their existing family home as an investment. The changing interest rate environment of the past nine months has altered this trend, bringing more property to the market.

Coupled with this, the banks have taken a more conservative approach to open-ended bridging which people often need when they buy before they sell. All of which has resulted in the current strong supply levels.

We have a very sound economy. It is probably performing as well now as it did at the height of the Celtic Tiger.

There is a lot of demand: our population is young and growing rapidly. Yes, the cost of money has increased, but by no means to a prohibitive level and we have some certainty as to its future stability.

The housing market has undoubtedly matured. We now have an attractive supply of properties giving choice to the many prospective buyers which is no bad thing.

Despite the air of uncertainty, transactions for the year to date are on par with last year. That is an indicator of the quiet confidence which exists in the market and the underlying need for housing that has underpinned the market for some years.

So, all in all, it is still a sound market. The heady days of prices rising by 25 per cent to 35 per cent a year are probably no more but the much discussed and oft-times derided soft landing is a welcome alternative.

• Michael Grehan is managing director of Sherry FitzGerald