Bank of Ireland has revised its 2003 house price forecast upward.
In its quarterly Irish Property Review, the bank predicts the price of second-hand houses to increase by 8 to 12 per cent nationally while house prices in Dublin are forecast to rise by 14 per cent.
The predictions would see the average price of a second-hand house rise to €270,000 by the end of the year. In Dublin the average cost of a second-hand house would increase to €363,000.
The review says the price of new houses will show smaller gains, but that there would be no sustained fall in prices as some have predicted.
It says the inadequate supply of houses in Dublin is contributing to the increase and that while house building in Dublin rose by 30 per cent last year, greater supply is needed.
Bank of Ireland chief economist Mr Dan McLaughlin says while total housing supply is at an all time high "an inadequate supply in Dublin is contributing to the continuing growth inhouse prices both in the capital and outside".
Mr McLaughlin said: "House building in the capital rose by over 30 per cent last year but this still resulted in only 12,600 completions, or some 22 per cent of the total increasein supply nationally.
"With 30 per cent of the Republic's population living inDublin, the figures imply a need for even greater supply in the capital," he said.
"In addition, annual demand this year is expected to be around 50,000 and as such below this year's supply; however, there is a substantial volumeof unmet demand," he added.
Labour's spokesman on environment, Mr Eamon Gilmore, said: "As house prices rise again, PDs must not be allowed veto over measures to control cost of land."
Mr Gilmore said: "If we are serious about making housing more affordable to ordinary people it is absolutely essential that we tackle the cost of building land. The cost of a site now accounts for about 50 per cent of the price of a new home.
"On the basis of evidence heard by the Oireachtas Committee on the Constitution, there is a now a considerable degree of consensus on the need to tackle this issue.
"The principal opponents of reform is this area, apart from the speculators, appear to be the Progressive Democrats. The PDs must not be allowed to exercise a ideological veto over the measures required to reduce the price of housing and to allow young families the realistic prospects of acquiring homes for themselves," he added.