Hopeful house buyers "will find it tough to find something", according to a leading expert on the property market.
Economist at Trinity College, Ronan Lyons, predicts that house prices will continue to rise between 5pc and 10pc over the next 18 months.
However, house prices in the capital have risen dramatically over the past three years - increasing by an average €102,000, or 46.2pc, since the end of 2013 - while those outside Dublin rose by an average of €48,000, or 36pc.
"It's important to distinguish the difference between Dublin and the rest of the country," Mr Lyons told RTE's Today with Sean O'Rourke.
"In Dublin there was a 5pc increase in prices in 2016 and that compares to a 2.5pc increase in 2015 so there is an inflation in cost in the capital. But it's still well below house price inflation outside Dublin - a 10pc increase in 2016.
"In practical terms it means that we saw countrywide an 8pc increase and the average asking price nationwide is 220k compared to a low of 160k about two years ago."
The same culprits responsible for pushing up house prices last year - lack of supply and a growing population - will lead to more double-digit increases this year, according to survey author Ronan Lyons.
Increases in house prices are particularly expected outside the capital, which saw double-digit inflation in 2016, according to Daft.ie.
The latest house price report by the popular property website found that house prices rose on average by 8pc over 2016.
While the rate of inflation was lower in Dublin - with house prices in the capital rising by an average of 5.1pc in 2016 - it was still almost double the 2.7pc price rise seen in 2015.
For anyone looking to buy a home outside Dublin, the rate of inflation last year was 10.1pc - a slight drop on the 13.1pc increase seen the previous year. The national average asking price for a home in the last quarter of 2016 was €220,500 - up from €204,000 over the same period in 2015.
Why the lower inflation in Dublin?
"There's two relevant factors here: the first is that prices in Dublin actually bottomed out earlier so if you count it, not just year-on-year, but from the lowest point, there has been a bigger increase but it was earlier," Mr Lyons said on the RTE radio show on Tuesday morning.
"The second related factor is the Central Bank rules; the average price in Dublin is actually higher than elsewhere at 325k, outside Dublin it's just over 180k. Once the Central Bank rules came in, because there was loads of income requirements and not just loan to value, they had a disproportional effect on the Dublin market. After the Central Bank rules came in there was effectively no change in house prices.
"It's really only in the last six months or so that we've seen a return to house price inflation in the capital - that's the effect of the Central Bank rules which are hitting the capital hardest."
Mr Lyons believes that the Central Bank are "very happy with the way the first years have worked out because in 2014 - myself included - worried about the emergence of another bubble."
"That was the way things were headed in 2014 when the Central Bank stepped in," he said.
"The recent relaxation of these rules, particularly combined with Help-to-Buy scheme; both of those look like they could stimulate demand, particularly for the first time buyer segment in Dublin. So we can expect to see further inflation in that part of the market in 2017."
Is the Help-to Buy scheme helping the supply problem?
"What we have in the market is a lack of supply - we are probably in need of between 40,000 and 50,000 properties to be built a year - we're currently getting between 10,000 and 15,000 - there's a huge problem there," Mr Lyons said.
"Suppose your house is on fire and you've two potential solutions; one is to call the Dublin Fire Brigade (get new supply) and the other option is to throw petrol on the fire to produce higher flames and hope the higher flames attract the DFB without having to call them (entice demand).
"When you stimulate demand even more compared to too little supply, you're creating a bigger problem in the hope that making the problem worse brings around the solution."
The news is obviously bad for buyers, who will "find it tough to find something", he said of the relative scarcity of houses, coupled with rising prices.
House price inflation continues to soar
But the dearth of affordable houses in the greater Dublin region is now being felt outside the capital, as prices continue to rise sharply in cities such as Waterford, Cork, Galway and Limerick, he said. House prices in Waterford jumped by 15pc over the past year, followed by 14pc in Limerick.
Prices also jumped by 13pc in Galway and 9.2pc in Cork between the last quarter of 2015 and the same period in 2016.
House price inflation in towns and villages in Leinster is now running at an average of 9pc, and the figure is 12pc in Connacht-Ulster.
Along with rising prices, the number of properties for sale nationwide dropped considerably in the final three months of 2016, Mr Lyons said.
There were just under 21,800 properties for sale anywhere in Ireland last month, compared with almost 25,500 in December 2015.
"This is the lowest national total since January 2007 and marks a fall of two-thirds from a peak of 63,000 in late 2008," he said. "While prices edged back in many markets in the final three months of the year, this comes after some very sizeable increases in earlier quarters, particularly outside Dublin.
"Overall, the market continues to be characterised by strong demand, albeit limited by Central Bank rules, coupled with very weak supply - both of new and second-hand homes," he said.
"This year has seen a number of measures that will serve to stimulate demand in the years ahead. Hopefully, the focus this year will be on supply."
Meanwhile, property prices have climbed to dangerous levels in several advanced economies, raising the risk of massive price falls if markets overheat, according to the Organisation for Economic Co-operation and Development (OECD).
Catherine Mann, the OECD’s chief economist, said the think-tank was monitoring “vulnerabilities in asset markets” closely amid predictions of higher inflation and the prospect of diverging monetary policies next year.
Data compiled by the OECD showed that Ireland, along with the US, is a country where prices seem to be "broadly correctly valued". The study notes that "prices have recently started rising again" here.
However, the report, which examined markets in a number of countries including the US, the UK, China and Germany, sounded the alarm for countries where they determined "houses appear overvalued but prices are rising".
"This is the case in the United Kingdom, Canada, Australia, New Zealand and, to a lesser extent, Austria and Sweden. Economies in this category are most vulnerable to the risk of a price correction – especially if borrowing costs were to rise or income growth were to slow," the study notes.
The warning comes as research by Countrywide reveals that the number of homes sold in the UK for more than the asking price has tumbled in the last year.
In January 2016, 41.5pc of homes for sale in London were sold above the asking price. But this fell to just 23pc in November. Nationally, the fall was less steep: from 29.8pc in March to 23.1pc in November.
(Additional reporting from Telegraph.co.uk)
Nationally, the average house price rose by 8pc in 2016, very similar to the 8.5pc in 2015. Compared with static prices in 2013 - although this masked huge regional differences - and an increase of almost 15pc in 2014, perhaps this, then, is the new normal.
The latest Daft.ie report also shows that average prices are far lower in the other cities. Cork is 247k, Galway is 248k and you can still probably get a place in Limerick on your credit card. The report shows that prices are rising sharply in these cities, so don't hang about.
When one considers the tumult wrought by Brexit and the election of Donald Trump as US president, Ireland's expected out-turn for 2016 of €4.3bn in commercial real estate transactions is all the more remarkable.