The housing market is beginning to show initial and tentative signs of recovery, with prices expected to rise again outside Dublin before the end of 2008.

Since the reform of stamp duty by Finance Minister and Tanaiste Brian Cowen in the Budget on December 5, there have been initial indications that, although the slump has not been reversed, it has certainly slowed, with increased signs of activity reported throughout the country and some evidence that at least some confidence is slowly returning to the marketplace.

The rate at which house prices have been falling has slowed. Since the beginning of December, the number of houses decreasing in price fell sharply from over 1,000 two months ago to just over 250 this month, according to Irishpropertywatch.com, which analyses on a monthly basis the number of house-price falls or increases across the country.

Also, the size of price decreases this month is significantly less than those seen in August, September and October.

One house in Kells had its asking price fall by €150,000 this month, compared to the biggest faller in September where the asking price of a house fell by more than €750,000.

One agent claimed that there have been instances where a "wait and see" attitude has been counterproductive.

"We had this house which the owners were looking to get €2m for it. This couple were told that if they offered €1.75m, they would get it. They stalled and stalled until another couple came in with an offer for €1.65m and got the house. And that has happened a few times," the agent claimed.

Also, many estate agents contacted this weekend have said that there has been a moderate rise in activity.

"For some it appears that a long slow corner is now being turned. We have sold more houses in December than we did in all of September, October and November. There is no doubt that people were waiting for the Budget and it helped seal the deal in a number of cases," said one Dublin agent.

Leading Dublin estate agent Peter Wyse said: "There were some people waiting for the Budget and it has helped to get them over the line. But the market is still dead, and activity remains very low. I would have liked to have seen the rates come down further."

Outside Dublin, the measure has been welcomed by those in the industry, with some warning that the increased activity will lead to prices bouncing back up again before the end of the year. Declan Cassidy of Gunne agents in Navan said: "These changes are likely to attract a significant number of additional purchasers to the market which could put upward pressure on prices as the year progresses. This will inevitably lead to 2008 being an active year in the housing market."

One of Ireland's leading economic voices has said that the Budget measures represented a panic U-turn by Brian Cowen in the wake of the disastrous November tax returns.

Friends First Chief Economist Jim Power said: "The bottom line is that the stamp duty reforms are welcome and should help ensure a more stable and efficient housing market in the medium term. The reforms represent a move in the right direction."

Power said that it is still too soon to determine clearly what impact the new measures will have on the market but it will help in restoring confidence to the market.

"The market is currently characterised by a distinct lack of confidence. Potential buyers are standing back from house purchase in the expectation that prices will fall further during 2008, having fallen by around 7 per cent this year. The reforms should gradually rekindle some level of confidence and activity in the market but it is likely to be a slow, gradual and modest process."

Despite the reforms, several key industry figures have said that they haven't gone far enough and won't deliver the "silver bullet" needed to reinvigorate the housing sector.

Robert Ganly, president of the Irish Auctioneers and Valuers Institute (IAVI) said that while he welcomed the "surprise reforms" they are not enough. He said: "The reforms are positive but he made a mistake in not including commercial property in his reforms. Even with the changes, Irish stamp duty rates are still far higher than elsewhere in Europe. They are still far too high."

- DANIEL McCONNELL