Ciarán Lynch, who is also heading up the probe into the banking collapse which fed into the housing crash, expressed fears after price hikes of 40% in some parts of Dublin.
“We are seeing indications of the danger days that we last saw in the early 2000s when property inflation was running well ahead of national inflation, and we know what that led to,” said Mr Lynch.
“With price rises up by 30%-40% in some parts of Dublin, we need to ensure that we do not end up with a second property bubble now that there is a level of confidence returning to the market.
“The Central Bank needs to make sure, through its supervision and auditing of the lending institutions, that only lending that is prudential is taking place. The authorities need to keep a close eye on time lines for mortgages, the loan to value, and the borrowers’ ratio in regard to earnings. Loans should only be in the region of three to four times earnings and for periods of between 20, 25 years.”
Mr Lynch called for a much more “hands-on” approach by the Central Bank after financial watchdogs were roundly criticised for lax regulation during the Celtic Tiger era.
Taoiseach Enda Kenny has denied that he is stoking a fresh property bubble by prioritising a raft of buyer-friendly policies.
Mr Kenny said he expected some 15,000 housing units to be built this year, with an annual target of 25,000 by the end of the decade.
A hard-hitting report released by the committee last month criticised the Government for a range of failures in the area.
While an upturn in the property market has mainly been confined to Dublin and some other urban areas, steep price rises have led to fears the country could be heading into another home-buying frenzy era as it emerges from the crash.