Hopeful house buyers “will find it tough to find something”, according to a leading expert on the property market.
Economist at Trinity College, Ronan Lyons, predicts that house prices will continue to rise between 5pc and 10pc over the next 18 months.
Increases in house prices are particularly expected outside the capital, which saw double-digit inflation in 2016, according to Daft.ie.
The latest house price report by the popular property website found that house prices rose on average by 8pc over 2016.
While the rate of inflation was lower in Dublin – with house prices in the capital rising by an average of 5.1pc in 2016 – it was still almost double the 2.7pc price rise seen in 2015.
For anyone looking to buy a home outside Dublin, the rate of inflation last year was 10.1pc – a slight drop on the 13.1pc increase seen the previous year. The national average asking price for a home in the last quarter of 2016 was €220,500 (£186961.85) – up from €204,000 (£172971.51) over the same period in 2015.
However, house prices in the capital have risen dramatically over the past three years – increasing by an average €102,000 (£86397.12), or 46.2pc, since the end of 2013 – while those outside Dublin rose by an average of €48,000 (£40697.76), or 36pc.
The same culprits responsible for pushing up house prices last year – lack of supply and a growing population – will lead to more double-digit increases this year, according to survey author Ronan Lyons.
Mr Lyons told the Irish Independent; “Pressure to buy isn’t going away. Likewise, supply won’t be coming on stream.”
The news is obviously bad for buyers, who will “find it tough to find something”, he said of the relative scarcity of houses, coupled with rising prices.
But the dearth of affordable houses in the greater Dublin region is now being felt outside the capital, as prices continue to rise sharply in cities such as Waterford, Cork, Galway and Limerick, he said. House prices in Waterford jumped by 15pc over the past year, followed by 14pc in Limerick.
Prices also jumped by 13pc in Galway and 9.2pc in Cork between the last quarter of 2015 and the same period in 2016.
House price inflation in towns and villages in Leinster is now running at an average of 9pc, and the figure is 12pc in Connacht-Ulster.
Along with rising prices, the number of properties for sale nationwide dropped considerably in the final three months of 2016, Mr Lyons said.
There were just fewer than 21,800 properties for sale anywhere in Ireland last month, compared with almost 25,500 in December 2015.
“This is the lowest national total since January 2007 and marks a fall of two-thirds from a peak of 63,000 in late 2008,” he said. “While prices edged back in many markets in the final three months of the year, this comes after some very sizeable increases in earlier quarters, particularly outside Dublin.
“Overall, the market continues to be characterised by strong demand, albeit limited by Central Bank rules, coupled with very weak supply – both of new and second-hand homes,” he said.
“This year has seen a number of measures that will serve to stimulate demand in the years ahead. Hopefully, the focus this year will be on supply.”