House prices in Dublin could rise by 7% this year, according to a new forecast from real estate firm JLL.

However, the company expects the growth in the capital will moderate next year to 5% before slipping back to 3% in 2023.

"Availability remains an issue, with a decline in the number of properties for sale and the completions of houses below required levels creating a falling stock-to-sales ratio," said Hannah Dwyer, Head of Research at JLL Ireland.

"In addition, interest rates have fallen, and labour market conditions remain steady, which will have a positive effect on ability of people to purchase houses and is likely to support price growth."

Tight supply will continue to be a factor into 2022, the research states.

"A looser housing supply and a normalisation of economic conditions will ease the supply-demand imbalance in 2023, and therefore we expect price growth will moderate to a more sustainable pace of 3% in that year," Ms Dwyer added.

JLL said its new model draws on 15 economic and residential market indicators and also incorporates market knowledge and sentiment.

On rents, JLL Ireland is predicting that rental price growth in Dublin will remain steady in 2021, with no change.

"There have been increases in stock levels within Dublin sub-markets, particularly the city centre, with an increase in renters returning to family homes during the pandemic," said Ms Dwyer.

"That is likely to cause a price decrease in Dublin city centre for rents in 2021, but with suburban rents showing minor increases, Dublin rents overall will remain unchanged for the year."

The model, however, forecasts 1.5% growth the following year and a 2.5% increase in 2023.

JLL says a more focused debate and political intervention is needed to increase housing supplies across the market.