The ESRI has warned it will be hard to get a home and even tougher to get a mortgage in the next couple of years.
CSO figures released last week have revised down the number of homes expected to be built over the next two years.
In particular, first time buyers in urban areas are struggling to be able to find or afford to buy a home.
Conor O'Toole, Senior Research Officer with the ESRI, says there are a number of factors putting pressure on prices.
He says that rising incomes, an improved labour market, a booming economy and the fact that people want to live in Ireland, particularly in urban areas such as Dublin, are all having an impact on prices.
"The key is to bring new units online and to have more supply, because that will allow people to have homes to move into," he said.
Click through slides with key points and figures from the ESRI’s latest economic forecast, including GDP growth, housing and labour market figures, public finance assessments and more. #ESRIpublications https://t.co/J4Ltii4QWb— ESRI Dublin (@ESRIDublin) June 19, 2018
Meanwhile, the Governor of the Central Bank has said house prices are "far below" their peak, but he expects them to cool off as supply increases.
Philip Lane's comments come after a recent survey showed house prices in Ireland are growing at the fourth fastest rate in the world.
Prices in the year to March have risen by 12% in Dublin and over 13% outside the capital.
Speaking to Bloomberg, Mr Lane said the strength of the economy means house prices are continuing to rise.
"Employment is growing strongly, wages are picking up, so when we talk about house prices there are some strong fundamentals there, " he said.
"It's also the case that we are still far below the peak prices but we think over time that as house supply increases this will cool off."
- Digital Desk