Did the Easter bunny eat a great big hole in Dublin’s normally effervescent auction market? Or has the giant bubble of Dublin’s high-end home market finally burst? That’s the question on the lips of many agents and homeowners. In the past few weeks it has become apparent that a market that started out as lively as a spring chicken suddenly turned as flat a Shrove Tuesday pancake.

This year’s auction season opened with all guns firing, much to the surprise of many who had predicted an easing off in market heat. In February, Lisney had sold a home in Sandymount for €9.5m, €4.5m above its advised minimum value (AMV), the most excessive of many off-mark valuations.

The situation became so ridiculous that in mid-March Home Ireland set up a panel that included a tailor, butcher, fruit vendor and camera specialist to see whether they could value top-end homes better than the professionals.

In four out of five cases, they did.

Since late last year, when an unprecedented €58m was paid for a home on Shrewsbury Road, the spring sales season had seen performance expectations rise among vendors, and prices pushed forward as big-name buyers fought for top-end homes. Trophy home after trophy home began leaving even the normally optimistic estate agents’ estimates for dust. Potential buyers went on their Easter break wondering whether they could really stretch to an auctioned property, while agents undoubtedly glowed.

The turning point came at the end of May, when a pair of trophy red-bricks went under the hammer, on the best road in Ireland, Ailesbury Road.

Surely these two would repeat the great auctions of spring and get the ball rolling again? Unusually, both homes just about squeaked over the line. One with an AMV of €9m sold for €10.6m, while the second was withdrawn at its AMV of €12m to sell afterwards for close to that price.

It’s been downhill ever since. For instance, the home of Anne Harris, the deputy editor of the Sunday Independent, and her former husband, Eoghan, in Trafalgar Terrace, Monkstown, was withdrawn recently at €4m with no bids. The property, which has extensive sea views, is now back on the market by private treaty at €3.8m.

With interest rates rising steadily and an equities prang that saw billions wiped off the Dublin stock market, there was speculation that reality had at last permeated the upper notches of Ireland’s property ladder.

Something has been going on that isn’t obvious at first glance.

Representatives of Dublin’s two biggest auction agencies, Lisney and Sherry FitzGerald, believe it is a temporary correction rather than a flatline. They think the lull has been caused by a cocktail of factors at the wrong time. Simon Ensor of Sherry FitzGerald says: “Even we didn’t predict the surge that took place in the spring season. It caught us by surprise. It just happened that there were fewer than average homes available, that those that did come to market were exceptional and that there were suddenly far more buyers than ever before on the market. The old laws of supply and demand took over.”

But on top of this came a confusing wild card brought to market by the AMV. This was introduced by Michael McDowell, the justice minister, as part of a plan to deal with what had been viewed as unfair practices by auctioneers, most notably the issuing of guideline prices that tended to be vast underestimates. Estate agents were accused of issuing lower prices to generate interest in the auctions.

The agents claimed they had created a monster they could not control. Buyers had become so accustomed to adding 20%-plus to guide prices that agents felt corrected guides would simply not be credible, and any sudden alteration would leave vast numbers of properties unsold.

Lisney, which has made most of the best top-end sales of the past decade, has been singled out for criticism in the past. Denis Beare of Lisney said: “While we mightn’t have agreed with all its aspects, we and other agencies saw the AMV as a chance to start over.

“Despite the criticism we received, we did alter our estimates in good faith when the AMVs were introduced. What took us by surprise was the unexpected surge in prices. So ironically, while we were trying to price accurately, the market surprised us and it just didn’t look that way.”

Ensor agrees. Indeed the evidence that this was the case has been borne out in the disposals of less publicised properties that returned to market having failed to sell at auction.

As both agents suggest, most private treaty prices sought for failed auction properties were indeed within close range of their issued AMVs and not 20% or more higher as was common in the past.

To explain the fall-off after Easter, both agents pinpoint a flip-over in the supply and demand balance. It seems those top-end homeowners who considered selling were encouraged by the prices early in the year and too many decided to place their properties on the market after Easter.

But both agencies remain unworried. Beare says: “We’ve heard the end called many times and this market has never ceased to surprise us.”

Whether they are right or not, we won’t find out until the autumn whether the blip is temporary or a reflection of a possible stagnation in the trophy-home market.

What we do know, however, is that after years of inaccurate guide prices and a poor start for AMVs, come autumn we may eventually end up with a valuation system for auction properties that reflects their true value. Or near enough.

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