Mortgage deposit rules are making Dublin less affordable for first-time homebuyers and fuelling an exodus to the commuter counties - where prices are also on the rise, a leading think-tank has warned.
The Economic and Social Research Institute (ESRI) told the Herald that first-timers are at serious risk of being priced out of the capital al- together.
That will put pressure on the city's already strained transport infrastructure, it added.
Dr Kieran McQuinn, associate research professor with the ESRI, said the shift in demand to the commuter counties could lead to further congestion.
"It only works if you have the infrastructure, but un- fortunately one of the downturns of having the boom-bust nature of investment that we've had is that we've had very little investment in public infrastructure over that period," he said.
"So all it's going to do is cause more congestion and greater loss in terms of commuting times.
"It would work all right if you had the infrastructure in place, but I think there are substantial deficits because of the downturn."
In its latest economic commentary, the ESRI warned that the deposit required as a result of the Central Bank mortgage rules makes buying a house in Dublin less affordable for first-timers.
Dr McQuinn said there was a fear that first time buyers could be priced out of the capital.
"Prices are getting back to an equilibrium level, certainly in Dublin, and that's quite a high level, so taking 20pc of that is a substantial amount, certainly for first-time buyers starting off, it's a hell of a sum of money to try and raise," he said.
"So, yes, I think there's a very genuine risk that that could occur."
The warning comes only days after National Asset Management Agency (Nama) chief Brendan McDonagh said that as a result of the Central Bank's mortgage deposit rules, first-time buyers in the capital could not buy anything above €320,000.
He also said demand was increasing in the commuter belt.
Dr McQuinn reiterated the ESRI's view that the think-tank agrees in principle with the macro-prudential rules from the Central Bank, but that the timing was not right.
He said it has a negative impact on supply, as it could deter some developers from proceeding with housing projects.