prices for a home in the capital are now spiralling at a faster rate than heated property markets in both London and New York, a report has warned.
Analysts have called for a clamp down on a new mortgage lending spree by Ireland's banks who are offering up to five times income - a rate experts say is now helping to drive property prices to unsustainable levels.
A report published today by Davy Stockbrokers calls for Irish mortgage loans to be limited at between three and four times income.
More controversially, Davy also proposes an 80pc loan to value limit "to take some of the froth out of the market." If implemented this would require buyers to save a 20pc deposit of €60,000 on a home worth €300,000.
The Davy report also warns that the days of "cheap" housing are now over - Dublin's house prices have risen by a quarter (25pc) in the last year compared with almost 6pc for the rest of the country.
"At their peak house prices in Ireland were over nine times the average income. Today at five times the average income they are more affordable, but far from cheap. If anything, they already look marginally expensive relative to the UK which currently has an average price to income ratio of 4.9 times."
Dublin's price increases matched the 20pc achieved in both London and New York by the first quarter but in the last six months Dublin has surged ahead by 5pc
The report also questions the sustainability of mortgages conducted over 25 to 35-year terms because record low interest rates would be unlikely to last. An average South Dublin home currently valued at €441,000 would, for example, entail an additional €518 per month on the back of a rise of just 2pc.
Meanwhile a new report by Myhome.ie says the average asking price for a home increased by 1.4pc nationwide over the last quarter while in Dublin it rose 3pc - or 1pc per month. The average asking price is now €193,000 nationwide.
It is the sixth quarter in a row that Dublin has recorded an increase and puts the mix adjusted average asking price in the capital at €263,000, up €8,000 in three months. The annual percentage change for Dublin is 9.6pc.
Caroline Kelleher from DKM Economic Consultants and author of the report added: "The supply problem in Dublin is continuing to drive price increases.
"There were only 500 completions in the capital in Q1 and given that the Housing Agency has forecast a requirement of 5,700 units in Dublin alone this year it is clear the current rate of completions falls significantly short. As a result our expectation is that prices will continue to rise over the coming months."
Both reports highlight a growing value gap between Dublin and elsewhere with Myhome.ie showing a 36pc difference while Davy points our that a semi detached is 66pc cheaper in Cork than in South County Dublin.
The Davy report calls for a reduction in VAT on new homes from 13.5pc to 5pc for two years and a reduction in development contributions for two years, a finance fund to support SME builders and a reduction in the windfall tax from 80pc to 33pc.
Yet another report by the Hooke & MacDonald estate agency estimates that site prices are likely to increase by 50pc this year with builders now starting to pay above what is viable in the hope that further house price increases will justify their purchases. However new money is starting to flow into the building sector.