House prices could fall by 10% over the next year-and-a-half, a leading property expert has forecast.

However, economic commentator and lecturer at Chartered Accountants Ireland Cormac Lucey also warned that a drop in house prices will not make the hunt for a home any easier, as supply will remain a barrier.

The latest Daft.ie house price report, released yesterday, shows a long-awaited stabilisation in house prices.

The average listed price nationwide in the third quarter of 2022 was €311,514 - up 0.1% on the average for the second quarter of the year.

Mr Lucey said he expects to see a drop in prices over the coming months, he told RTÉ's Brendan O'Connor show yesterday.

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However, if low supply remains a problem, budding homeowners will still face difficulty securing a property. "There's an individual problem for a couple or a household trying to find a house. They may have savings and it may make their situation easier if house prices drop. And I think they are likely to drop in the next 18 months - not a lot, maybe 10%. But that won't fix the collective problem that there are more people than there are houses available.

"Whatever the price is, that doesn't change the calculus of people versus houses," he said.

The Daft.ie report also showed the number of homes available to buy on September 1 stood at nearly 15,500 - up 22% on the same date last year and the highest total nationally in almost two years.

Report author Ronan Lyons echoed Mr Lucey's comments about the importance of supply, saying the "health of Ireland's housing system is ultimately measured by how responsive supply is to demand".

He said: "This year, Ireland may see 25,000 new homes completed - as things stand, the most optimistic forecasts for next year are that this total would be matched.

"This is in part because construction costs have increased - by almost 15% in a single year, according to the SCSI's latest figures - and in part because, since 2018, Ireland's planning system has effectively become embedded in Ireland's legal system, slowing down the conversion rate from permissions granted to building started."

This comes as rising interest rates, as well as the surging cost of living, continues to put pressure on house buyers.

Thousands of mortgage-holders will see their repayments spike by more than €1,000 a year after the ECB raised interest rates by a record 0.75% this month.

The first to be hit in Ireland will be the nearly 400,000 borrowers on tracker mortgages, whose repayments will rise immediately.

Variable-rate borrowers are also expected to be hit on the double as their rates were left untouched by the main banks when the ECB rates rose in July.

Bank of Ireland is also tightening its mortgage lending rules by reducing the amount people can borrow to 2.5 times their income - which is one multiple below the Central Bank's rule of a maximum of 3.5 times.

Housing Minister Darragh O'Brien revealed last week that more than 1,000 applications have been lodged for the Government's First Home Scheme since it opened just two months ago to help first-time buyers onto the property ladder. The scheme's €400million fund will take an equity stake in a buyer's home by paying the difference between what the buyer can pay with their savings and mortgage funding, and the purchase price.