House prices in the capital are rising twice as fast as anywhere else in the county.

Property Industry Ireland (PII) says house prices have increased more than 16% and transactions arfe up by 10,000 on last year.

But it warns that the underlying strength of the economy and "the erosion of affordability in cities" means we could see an increase in the cost of living if there is no coordinated strategy for 2015.

The body representing businesses in the Irish property sector says the number of properties sold jumped from 24,992 to 34,676.

PII director Dr Peter Stafford said: "Prices in Dublin only fell by 0.1% in November which was largely expected. So too was the slow-down in prices compared to the same period of last year."

"Taking the figures for the last year, the greatest increase in prices is taking place where the shortage of housing is most acute and economic growth most strong, notably Dublin which are up 22.4% over the last year."

"We now have a clear and growing divide between the Dublin and rural housing markets where prices rose 9.6%. This is largely the consequence of an under-supply of new housing to meet increased demand", he added.

PII says since all parts of the housing sector are intertwined, it is vital that 2015 is the year Ireland gets a "coordinated national housing strategy to reflect this."

It believes that the outlook for house prices will be determined by the speed with which new houses come onto the market and underlying consumer confidence.

"Government, through the proposed Planning Bills, and the Central Bank's new lending policy, have roles to play in working with the property industry to bring stability to the housing sector," it adds.