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Since the beginning of 2001 there has been a significant moderation in the rate of growth of house prices.

Bacon predicted that, despite the measures recommended in his third report house prices would double again by 2005.

That may prove slightly optimistic. However, despite some gloomy predictions at the time, few experts believe that a serious negative equity problem is likely.

Despite the rises since 2001, interest rates remain low by historic standards. Wages look set to continue their upward spiral and net immigration is also set to continue. Estimates are that 200,000 new workers will be required over the next 5 years to service the economic expansion predicted.

These factors are likely to continue to provide upward pressure on house prices.

On the other hand, the supply of development land is being boosted by the reduction in capital gains tax to 20% and Bacon III contains strong proposals to penalise developers and landowners who own zoned and serviced land but are not actively seeking to build on it. Bacon also recommended Special Development Zones speeding up the Planning Approvals process in certain areas. At the same time, the output of the building industry showed worrying signs of decline in 2001 though it seems to have stabilised since then.

Figures suggest some further slowing in the pace of increase in house prices with small declines in some areas, though generally not in the first time buyer end of the market. The Government is obviously concerned about the negative impact the difficulties in the housing market is having on voters. At the same time however, they are aware that the only thing worse than a strongly rising housing market is a declining one and the attendant perils of negative equity, so they must tread carefully!

In the commercial sector, the economic hiccups of 2001 undoubtedly had a negative impact on demand, but provided we don't spiral into recession, and nobody is predicting that, this is not likely to be major. Indeed, the events of 2001, the shakeout of stockmarkets since 2002 and subsequent world unrest make property look like a relatively safe bet for long term investors. Therefore, steady performance from this sector is in prospect.

Strong demand from urban dwellers, farmers, developers, forestry interests and investors, coupled with the historically low level of land available for sale is almost certain to see a further increase in land values. Farmers looking to replace land compulsorily acquired for the massive ongoing roads program will provide an underpinning influence in the agricultural land market over the next few years.

2005 was a more difficult year for Irish residential property with smaller increases across all sectors and in all regions. Many auctioneers welcome some moderation in vendors' expectations as it may mean that property is marketed at a more realistic price.

However, consensus forecasts are for increases in the range of 6% to 12% nation-wide in 2005 as a whole.

Commercial property performed particularly well in recent years as investors with capital sought better opportunities than deposits or the lacklustre Irish stock market could provide.

With the ESRI, normally a conservative organisation, predicting growth averaging 5% per annum in Ireland for the next 5 years, it seems likely that demand for commercial property will be supported by foreign buyers looking to establish or expand their presence in the Irish market.

Given our still relatively low interest rates, domestic demand seems assured too. The expansionary budgets since 1999 can only add to the already strong demand. If some investors are deterred from the residential market, some of their funds may find their way into the commercial property sector providing a further boost.

Land sales were at their lowest for many years in the last few years and little seems to have changed. There are signs of marginally more land on the market in 2005.

However, in Ireland it has always been the case that land is more than just a capital asset to be liquidated in tough times.

With the wide uptake of REPS (Rural Environment Protection Scheme) and the continued support for production provided via the EU's CAP (Common Agricultural Policy), most farmers can at least meet their borrowing commitments.

So long as they can do this, they will always see land sales as a last resort.

Low interest rates are also of benefit to landowners in this regard and, in the absence of further significant increases in the cost of borrowing, the supply of land for sale is unlikely to increase significantly. Of course the strong demand for labour in the wider economy has also allowed many farmers to supplement their declining farm income from off-farm sources.