A report says the annual rate of Irish house price inflation is at its fastest pace in two years

KBC Bank says it accelerated to 12.3% in July.

It says this was led by the largest monthly rise in Dublin property prices since July 2014 - up 2.7%.

Dublin house price inflation is now outpacing the rest of Ireland for the first time in two years.

Growth in the number of Dublin property transactions outpaced the increase in prices through the second half of 2016.

Source: KBC

But the increase has slowed, even as the pace of increase in prices has picked up.

KBC says this highlights an increasing shortfall in supply relative "to notably strengthening demand."

"The current momentum in house price inflation is stronger than might have been envisaged and reflects the strength of pent-up demand now emerging in the face of a very limited increase in new supply," KBC says.

"This surge should eventually ease but this process could take a year or more."