A new report shows that the annual rate of house asking price inflation nationwide in the second quarter of this year fell to its lowest level in five years.

The latest house price report from MyHome.ie also reveals that asking price inflation in Dublin entered negative territory for the first time since 2013.

The report, published in association with Davy, found that annual asking price inflation has now slowed to 2.4% nationwide, while in Dublin it is down €2,300 on a yearly basis. 

But despite the downward trend in the annual inflation rate, house prices are continuing to rise, although at lower rates. 

The MyHome.ie report found that asking prices for newly-listed properties nationally increased by €5,000 in the second quarter.

House prices rose by just €2,000 in Dublin - the weakest second-quarter gain in the capital since 2012.

Conall MacCoille, chief economist at Davy, said that while the price falls may fuel fears of a more damaging downturn, the reason for the price falls this time round were as a result of increased regulation. 

"The current slowdown in price inflation is largely due to the Central Bank's lending rules and stretched affordability.

"These factors are preventing the latent housing demand from translating into rampant house price inflation fuelled by rising leverage on mortgage loans," Mr MacCoille said. 

The economist said that Ireland’s economy continues to perform well and the property market will continue to be underpinned by high employment and wage growth.

"While the economy has been driven by strong foreign direct investment, export growth and a slow rebound among indigenous companies, the recovery in homebuilding is still in its infancy," he added.