The rate of increase in asking prices for houses slowed during the third quarter, new data from property listings website shows.

Nationally the prices being sought fell by 1.3% between July and September compared to the previous quarter, bringing the annual rate of inflation back to 7.8%.

The median asking price in the quarter stood at €320,000.

In Dublin the change quarter-on-quarter was a fall of 1.1%, with the year-on-year rate of increase standing at 6.2%.

In the capital the median asking price for a house was €420,000.

Outside Dublin, listed prices fell 1% between the second and third quarter, leaving the annual rate of asking price inflation at 9%. said the data shows the Irish housing market has started to normalise as activity levels return to usual season patterns.

"Asking prices are typically weak as the busy summer trading season peters out and fell in both Q3 2018 and Q3 2019," said Conall MacCoille, chief economist at Davy who wrote the latest price report.

"After the disruption of the Covid-19 pandemic, the usual seasonal pattern has re-emerged."

The report also claims that there is continued evidence of vendors returning to the market.

As a result, the number of available properties for sale on increased to 16,300 in September – an increase of 46% compared to the start of the year.

"On one hand, new listings for sale are strong, suggesting the market is merely making up for lost time following delayed transactional activity in 2020 and 2021," Mr MacCoille said.

"However, it is most unwelcome to see construction activity curtailed by supply chain issues and rising input costs," he added.

Despite the softening in the rate of asking price increase, the analysis suggests property price inflation here will continue to rise by 6% through 2022 and by 3% in 2023.

"There are of course many risks to this view. Ireland potentially faces an energy crisis this winter amid fears of a full-blown European recession brought on by events in Ukraine and surging natural gas prices," said Mr MacCoille.

The report also shows that the average time to sale agreed in the third quarter dropped to 2.6 months nationwide.

Mr MacCoille said this is indicative of a very tight housing market.

The average level of mortgage approval rose 8% year-on-year to €288,300.