A new property price index shows the percentage of first-time buyers has fallen
A major think tank is warning housing supply could drop by up to 5% over the next four years.
It comes a new property price index shows the percentage of first-time buyers in the housing market has fallen.
The ESRI is blaming new mortgage lending rules, which force first time buyers to have a deposit of up to 20%.
Their latest research says there has been a dip in the number of mortgages being taken out.
It says this is about to have a knock-on affect on the whole housing industry.
The ESRI predicts house prices and construction profits will go down, which means fewer homes are built.
The Central Bank is currently conducting its first review of the new mortgage rules, introduced last year, to stop the market from overheating again.
Kieran McQuinn is research professor with the ESRI.
He told Newstalk Breakfast some of this is to be expected with the new mortgage measures.
"Over a period of time - and this could take three or four years, in terms of the full impact of the measures, it would appear to us that house prices, supply, mortgage lending will all be lower than what they otherwise would have been if the measures hadn't been introduced.
"And to a certain extent that's to be expected - I mean the nature of these measures is that they are essentially contractionary.
"They're meant to take steam out of the market or, if you like, to reduce activity levels in the market - that's essentially how they operate."
While a new Residential Property Price Index (RPPI) from the the Central Statistics Office (CSO) has found that the first-time buyers’ share of the market fell from 53.1% in 2010 to 24.4% in 2015.
It says house prices in the Dublin city administrative zone are "leading the recovery from the national low point of March 2013".
While houses in the Mid-West region have been slowest to recover to date.
It also shows that first-time buyer owner-occupiers formed a decreasing proportion of the market between 2010 to 2015.
"In 2010, first-time buyers represented 53.1% of all household market transactions filed. By 2015, first-time buyers’ share fell to just 24.4% of the market", the CSO says.
It also shows that there was considerable variation in average prices across Dublin, depending on the postal district.
With an average price of €733,006, householders paid more for a house in Dublin 6 in 2015 than for any other postal district.
The second most expensive district was Dublin 4, with an average house price of €724,535.
Householders paid least in Dublin 10, where the average house price was just €157,527.