Property price inflation in Dublin, where supply problems are most acute, is now at its lowest level in over two years.
The latest official figures indicate house prices in the capital increased by 0.9 per cent last month and were 6.5 per cent higher than 12 months ago.
This was the lowest annual increase since June 2013 and contrasts with the 20 per cent rate recorded in April.
Most experts link the fall-off to the introduction of the Central Bank’s lending restrictions and the ending of the Capital Gains Tax (CGT) waiver for property purchases.
Nonetheless, prices are expected to remain on an upward curve due to demographic pressures, rising employment and lower taxes.
The latest official figures indicate prices nationally rose by 1.3 per cent in September and were up 8.9 per cent from a year ago.
Outside of Dublin, property values are now rising at a faster rate, with prices up 1.6 per cent in September and 11.4 per cent annually.
In Dublin, average house prices rose by 1.1 per cent while apartment prices fell by 0.4 per cent.
However, the CSO warned the sub-indices for apartments were subject to a high degree of volatility due to the low volume of trades.
Despite the rises, residential property prices nationally are still 34.6 per cent lower than their peak level in 2007, the CSO noted.
Dublin house prices, meanwhile, were 33.7 per cent lower than their peak, while Dublin apartment prices were 40.7 per cent off their peak values.
Outside of Dublin residential property prices were still 37.7 per cent lower than their boom time high.
The Central Bank's deputy governor Stefan Gerlach said recently it was still too early to say what the overall effect of the new rules had been but noted some evidence that they had dampened speculative buying in the market.
"One has to assume that the tighter mortgage lending restrictions imposed by the Central Bank and the end of the Capital Gains Tax (CGT) property purchase incentive scheme as announced in Budget 2015 have weighed negatively on the market this year," Merrion economist Alan McQuaid said.
Goodbody economist Dermot O’Leary cautioned against “over-interpreting these trends” as there would have been distortions caused by both the introduction of new lending rules and the ending of the CGT waiver.
“It will take some time for these distortions to wash through,” he said.
Property Industry Ireland, the Ibec group that represents builders, warned the slowdown in house price inflation was masking a housing shortage in many parts of the country.
PII director Peter Stafford said: “There is a severe shortage of accommodation to rent in many urban areas, and a lack of affordable housing to buy.”
“It was disappointing that the budget did not put any measures in place to stimulate new development, nor does there seem to be a strategy to help achieve a supply-demand balance over the longer-term,” he said.