Fears over the cost of living, high energy costs and uncertain interest rates are putting a major dampener on homebuyer demand, a new report shows.

The majority of potential buyers say the cost of living has affected or delayed their purchase, even when they have funds approved to find a new place, a survey by property website MyHome.ie found.

Meanwhile, campaigner David Hall said many would-be purchasers are simply worn out by the whole process, despite new Central Bank lending rules introduced in January which increased the amount of money first-time buyers could borrow.

Mr Hall, head of the Irish Mortgage Holders Organisation, said: "People thought they could go and buy a house with four times their salary, thank you very much, and let's move on.

"But those same people are now worn out by the process - the length of time it takes to get mortgage approval, the lack of properties out there, the competition with cash buyers and those who have saved up a war chest of cash during Covid, the list goes on. There's a pyramid of buyers, and only the very top tier can actually afford to buy a house - and that number is getting smaller all the time."

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He added: "There is a massive level of concern and caution out there. Another factor is that banks are now assessing a person's ability to meet the rising cost of living, when they are looking at lending.

"That did not used to be as much of an issue, but now the cost of living is very much higher, it will affect the amount they are willing to lend following a stress test."

Some 56% of potential buyers are worried interest rate increases will affect their ability to buy, according to the MyHome.ie survey of 2,509 people, carried out between February 23 and 28, which was released today.

Another 55% of prospective home buyers say the increase in the cost of living has affected or delayed their purchase, and 63% of buyers have had to look beyond their top choice of location because of price concerns.

Last August, 24% of prospective home buyers said they believed the next year would represent a good time to buy property. But now only 13% of respondents are saying the same.

Myhome.ie said that despite the poor consumer sentiment, robust demand still appears to be a strong feature of the property market, with a large proportion of the respondents financed and ready to go.

Almost two-thirds (63%) of respondents have their finances in place to buy a property in the next year, and more than half (56%) say they are confident about their ability to buy in that time.

Joanne Geary, managing director of MyHome.ie, said: "There is still significant pent-up demand among prospective home buyers."

But she said supply remained a critical problem.

"Even though over half of our respondents have finance and are ready to buy, just 13% believe the next year will be a good time to buy property.

"Added to that, a large majority (86%) believe the Government should be doing more to help. The various schemes that have been introduced have eased the pressure, but in reality we need to see a significant increase in homebuilding to satisfy demand."

The survey also found energy concerns dominating market sentiment. Searches by energy rating on MyHome.ie have risen by more than 35% in the first two months of the year compared to the last two months of 2022.