New research has suggested house prices in Dublin and surrounding areas are dropping.

Data from the Real Estate Alliance (REA) has found the rate of increase in second-hand, three-bed semi-detached home prices in Dublin city's postcode zones was just 0.1% over the last three months.

This is compared to 4.1% for the same quarter last year.

The price of a three-bed semi-detached house in Dublin has increased by just 2.7% in the last 12 months.

The Q3 REA Average House Price Index says after rising by 12.5% in 2017, the average price of a second-hand semi-detached house in the capital has increased by just €5,300 so far this year - and now stands at €443,333.

Prices in the north of the county have risen by 7.5% in the past 12 months, and 0.8% since June to an average of €322,500.

Source: REA

It says: "This is in stark contrast to South County Dublin where prices are static on the quarter and have risen by just 2.4% since last September, with the average three-bed semi selling for €410,000, and the time taken to sell rising from five to six weeks."

The average semi-detached house nationally now costs €234,824 - a rise of 1% on the 2018 figure of €232,441.

Overall, the average house price across the country rose by 5.8% over the past 12 months - a decrease on the 8% recorded to June.

Growth in the commuter counties also slowed to 0.9% in the last three months, with the average house now selling for €248,528 - a rise of €2,000 on the second three months of the year.

Major cities outside Dublin recorded a combined Q3 rise of 0.8%, with an average three-bed semi costing €249,375.

Both Waterford (+2.5% €205,000) and Galway (+0.9% €275,000) saw increases, with agents in both locations citing strong demand but a shortage of suitable properties.

Limerick city (€200,000) returned its first static figure in a number of years, and Cork city also registered 0% growth in the quarter.

Source: REA

The highest increases were seen in the rest of the country's towns, which experienced a 2.1% rise in Q3 to an average of €156,383 - up €3,000 in 12 weeks.

REA spokesperson Barry McDonald says the Central Bank's mortgage lending restrictions are putting a stop to rampant house price inflation.

"There is no doubt that the Central Bank rules are having an effect in the market, and are achieving what they set out to do in terms of keeping a lid on prices.

"In the Celtic Tiger years, all prices rose across the board, but in 2018 the system is actually working and the only price inflation is in a new homes market that is concentrated in pockets.

"The second-hand market has become extremely price sensitive, not just in Dublin, and when we look across the country it is the areas with quality housing stock available for under €270,000 that are achieving highest growth."

He says the effect of the Central Bank's borrowing rule on price ceilings has seen a drop-off in viewings for four-bedroomed housing in certain areas, where they are priced over €400,000, for example.

"Many agents are attributing the lack of transaction to the fine weather in the summer, and report an upswing in activity in September.

"However, there is a defined slowdown in the annual rate of house price inflation as measured in our survey".