Asking price for homes has shot up by fastest rate in nearly two years

There has also been a huge jump in the number of first-time buyers maxing out on what they can borrow.

National asking prices were up 7.3pc in the three months to May when compared with the same period last year, according to the latest quarterly house price report from MyHome.ie in association with Bank of Ireland.

Property experts are now predicting that values will rise by between 5pc to 6pc over the year in full, a situation that will pile more pressure on those trying to buy their first home.

The MyHome.ie property report shows there has been a significant rise in the number of first-time buyers borrowing the maximum allowed for their income under Central Bank rules.

Property prices now rising at fastest pace in two years

This is due to the surge in property values.

The share of first-time buyers borrowing between three-and-a-half times and four times their income has shot up from 6pc in 2022 to 36pc in one year.

This comes after the Central Bank loosened its lending rules to allow first-time buyers to borrow up to four times their income.

In May, houses were selling for 6pc over their original asking price, signalling fierce competition among ­homebuyers.

The average time to sale agreed was just over 11 weeks in the second quarter of this year, close to a record low and emphasising a poor supply of properties, said Bank of Ireland chief economist and the author of the report Conall Mac Coille.

Nationally, the median, or middle range, asking price is now €365,000, a rise of 5.1pc since the first three months of the year and 7.3pc since last year.

Dublin median prices in the April to June period were €465,000, up 3.3pc on the last quarter and up 7.2pc on the same period last year.

Outside of Dublin, the median asking price is up 6.7pc since the start of the year and up 7.6pc in the year, to €310,000.

Factors pushing up prices include a 4.7pc rise in average earnings to €50,300 in the year.

And there has been an almost €13,000 rise in the average mortgage approval value to €313,000 in the year to April, Mr Mac Coille said.

The number of properties listed for sale on MyHome.ie was just 12,500 at the end of last month, down 11pc on last year.

Mr Mac Coille said the message from the latest MyHome.ie property report was that house prices have gained further momentum. He said the sustained strength of the Irish labour market was having a significant effect.

“The fierce competition between homebuyers has continued into the second quarter, with residential transactions in May being settled by 6pc on average above the original asking price,” he said.

Another factor impacting prices is the continual poor levels of property supply in the market.

Managing director of MyHome.ie Joanne Geary said it will take time for the growing rate of housing starts to have a real effect on the market.

Meanwhile, ICS Mortgages is reducing the interest on its buy-to-let variable rate mortgage products.

“The new variable rates will come into effect on the August 1, reflecting our commitment to supporting landlords and property investors with competitive mortgage options, coming down by 0.15 percentage points,” it said.