THE OUTLOOK for Dublin's property market is precarious despite a 3.9pc price surge in September, a top economist has said.
Last month's jump contributed to a 12.3pc hike in the average cost of a home in the capital over the past year.
Prices rose by 3.6pc nationally during the same period and by 1.8pc in September, data from the Central Statistics Office (CSO) reveals.
When Dublin is excluded, the figures fell by 2.6pc over the past year, highlighting the two-tier nature of the market.
House prices in the capital grew by 4.2pc and were 12.2pc higher than the same time last year. Apartment prices in the city were up 11pc last month.
With mortgage lending remaining weak, cash buyers are driving the hikes.
But economist Dr Constantin Gurdgiev does not believe the capital is in the grip of a new property bubble.
The lecturer in finance at Trinity College said: "I can't honestly say that this is a mini-bubble of any sort.
"What it is consistent with is the phenomenon known as overshooting. When prices come down in the property market, they tend to overshoot their long-term equilibrium price.
"They become more volatile on their downward trajectory."
He believes the market may simply be correcting itself as a result of prices falling below their equilibrium levels.
He said "there is certainly a shortage of supply", a fact that is the legacy of a "disastrous planning and development approach". Despite recent gains, house prices in Dublin remain 49pc lower than their highest level in early 2007. Apartments are 59pc lower than they were in February 2007.
Merrion Stockbrokers economist Alan McQuaid said there are clear signs the property market is recovering and also believes talk of another property bubble is "overdone".