Estate agents have rejected suggestions by a Fine Gael MEP that they contrived to inflate houses prices last year by predicting significant price increases in 2007.
A number of Irish estate agents last year predicted house prices would increase by up to 10 per cent in 2007, according to Gay Mitchell. He said estate agents should be held to account for making over-optimistic predictions to keep 2006 prices "falsely high".
"Hooke & MacDonald forecast increases of 9 per cent in 2007, Sherry FitzGerald predicted 8-10 per cent . . . while the Permanent TSB ESRI figures show that houses prices actually fell by 2.1 per cent between January and May," he said.
Speaking ahead of delivering his report on the European Central Bank to ECB President Jean-Claude Trichet in Strasbourg tomorrow, Mr Mitchell said estate agents must explain why they did not take interest rate increases into account in their predictions. "How were they not aware that interest rate increases would lead to house price decreases and why did they not make people aware? It must be asked was there simply collusion to push up prices and keep prices at a falsely high level."
Ken McDonald of Hooke & MacDonald auctioneers said they made the prediction last summer when indications were that houses prices would continue to increase. Subsequent decreases were due to political interference in the market and negative media coverage, he said.
"Interference in the market in respect of stamp duty and the very unbalanced RTÉ property shock programme frightened people and had a damaging effect on the market," he said.
It was too early to say their predictions would not be realised, Mr McDonald said, rejecting any suggestion that the predictions had been made to distort the market. "That is a scurrilous remark that's not even worthy of comment," he said. "We are always very responsible and have certainly not misled people."
The Institute of Auctioneers And Valuers in Ireland said it was ridiculous to suggest its members had interfered in the market.
