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WHEN it comes to property, the reverse of Newton's law applies – what goes down must also go up.

The latest figures from the CSO demonstrate that six-and-a-half years from when prices first began to stall, the world's joint worst ever property crash has finally ended.

In reality the recovery in the market has been under way for quite some time. Property prices in some parts of Dublin, where the crash started in the summer of 2006, have been rising since at least the middle of the year and perhaps even since January, when a shortage of family-sized homes began to make itself apparent.

Of particular significance is the fact that prices have been rising nationwide (1.1pc in November) and not just in Dublin where the fundamentals are strongest.

Hike

The November hike in the capital (more than 2pc) is actually above the monthly increase rate typically experienced during the boom years when prices rose at a rate of 1.2pc to 2pc per month.

The first signs came last January when a Sherry FitzGerald report stated that prices were over-correcting.

In April, the Central Bank agreed and estimated the over-correction at between 12pc and 26pc.

It listed the deterrents for purchasing as follows:

1. A lack of investor confidence.

2. Fears of further falling prices.

3. Worries about the economic situation generally.

4. The lack of bank credit.

Since then confidence has lifted somewhat, prices and the economy have stabilised and there are signs that banks have begun lending again, albeit in limited circumstances. Since January it's been generally cheaper to buy than to rent.

While Ireland's property price crash has been unique in terms of its sheer scale (49pc matches Japan's worst ever crash from 1991) it has not been exceptional in terms of how it has played out.

A look at the 'Four stages of a bubble' model, which shows the cycles of property markets as expounded by world 'bubblenomist' Dr Jean Paul Rodrigue of Hofstra University, NY, shows our property market has passed through the 'mania' phase (up to 2006) and through the 'blow-off phase' (2006 to 2011).

The CSO stats now suggest 2012 was the 'stealth phase' through which most people maintained a pessimistic outlook, but a period during which the smartest investors bought their property.

This was best illustrated back in October when it was revealed that one investor had acquired a house on Dublin's Northumberland Road in July for €550,000 and 'flipped' it three months later for €685,000, earning a profit of €135,000.

In October's Allsop Space Auction, more than 50 overseas bidders placed offers.

The latest CSO property market figures suggest we have now crossed into Rodrigue's 'awareness stage' of the cycle, during which the majority accept that the worst is over and institutions tend to begin investing again – and why investors may have already missed the boat on the best investments.

Don't expect a straight rising line in prices – recoveries tend to happen in jumps and starts with some backward steps.

Going forward, we will likely see occasional monthly falls (as happened already in June after May's hike in values).

Irish Independent