New research has suggested that while house prices are continuing to rise, the rate of inflation is slowing.

MyHome.ie said this is mainly due to tighter bank lending.

Asking prices rose 7.2% in the year to the second quarter - the slowest pace of inflation in two years - and down from 9.5% in the first quarter.

In Dublin, asking price inflation has slowed to 6.8%, down from 11% at the turn of the year.

The report, published in association with Davy, found that the prices of newly-listed properties nationally rose by 3% while prices in Dublin rose by 2.2%.

Newly-listed properties are seen as the most reliable indicator of future price movements.

The average asking price for new sales nationally is €270,000 while in Dublin it is €384,000.

Author of the report, chief economist at Davy Conall MacCoille, said the slowdown in house price inflation should be welcomed.

"The Celtic Tiger years demonstrated the folly of allowing rising leverage in the mortgage market to drive double-digit house price inflation indefinitely.

"This time round, the Central Bank's 3.5 X loan-to-income (LTI) threshold is preventing households from chasing prices higher by taking on excessive mortgage debts.

Source: MyHome.ie

"We would normally expect the slowdown in asking prices to feed through into transaction prices within the next three to six months.

"For now, we are seeing stronger price gains in less expensive areas of Dublin and among the less expensive property types.

"For example, one-bedroom apartments in Dublin are up 11.4% on the year but four bedroom detached houses are only up 2.3%".

He also warned that Ireland still faces "an acute housing shortage but unlike the past there is a more sensible debate on how to solve the problem."

Angela Keegan, managing director of MyHome.ie, said the improvement in stock levels, particularly in Dublin, was good.

"Our data shows that stock levels nationally are up 3.7% on the year to 21,600, the first positive growth since 2015.

"In Dublin where the housing shortage is most acute, stock has risen by 25% to 5,000 homes which is very positive.

"With few homes now in negative equity transactions among existing homeowners with mortgage debt are on the rise.

"There are also now 409 new housing developments listed for sale on MyHome - well up from the 342 in mid-2017".