Minister Richard Bruton says he doesn't think the new mortgage rules will lead to a second housing bubble.

The Central Bank announced yesterday that it is halving deposits required by first time buyers to 10%.

The government has said it's a signal to developers to start building.

"Clearly if prices and lending trends are such that houses aren't getting built and rents are soaring, that's not a proper balance", he said. "We're far from a situation where house building levels are a risk to our economy.

"The greater risk is that we don't have enough houses built and we don't have the supply of housing to meet the growing success that we're enjoying in employment creation. This is a correct move, in my opinion, by the Central Bank."

Governor Philip Lane said: "Over the past 18 months, the measures have helped to ensure that those who buy homes are better prepared to manage their mortgage payments in the event of a future downturn in the economy or in the housing market.

"While our review process affirmed the value of the overall framework, some modifications to the measures were suggested by our evidence-based analysis.

IBEC says the Central Bank's review of its mortgage deposit rules will bring more certainty to the market.

Its property group, Property Industry Ireland, said that the move will mean that the level of demand will be clearer and this certainty will improve supply.

However, Savills economist Dr John McCartney warned that relaxed mortgage rules will push prices even higher.