The surge in house prices this year is partly a “problem of success” in Ireland’s economy, according to the author of the latest MyHome Property Price report.

The report warns that property prices are now rising at their fastest rate in 18 months.

The median asking price for a home in Ireland is now €340,000 – meaning price inflation is now running at 6.5%.

The report also shows renewed momentum in Dublin, where property price inflation is now running at 7.2%.

Inflation is running at 5.5% in the rest of the country.

On Newstalk Breakfast, report author Conaill MacCoille said some countries are seeing rising house prices due to economic – but Ireland’s accelerating costs are partly a “problem of success”.

“The labour market has performed extremely well compared to most other countries,” he said.

“We're seeing very strong jobs growth - the level of employment is already 14% above what it was pre-pandemic in 2019.

“Wage growth is obviously there as well, and that is driving up house prices.

“It is a problem of success, but what we all need to be conscious of is that if rates continue to rise, if we see this lack of housing supply not resolved, it will hurt our competitiveness and eventually slow the economy.”

Lack of supply 'pushing prices up'

Mr MacCoille emphasised the increase in housing prices is in large part due to a lack of housing supply.

“With the lack of homes out there, people are competing against each other,” he said. “They’re just pushing the prices up.

“There's a kind of consensus that we need 30,000 to 35,000 houses per annum to meet demand.

“We haven't met that number for at least 10 to 15 years at this point and year in, year out, demand has increased.

“We see that in terms of people still living at home with their parents with other people kind of packing into apartments with people they’re not related [to].”

The Bank of Ireland Chief Economist said we need to build a further 250,000 houses by 2030 to meet demand.

He pointed out, however, this would only lead to asking prices increasing at a “modest rate” rather than dropping, since it is quite rare to see house prices drop.