Recovery in house prices is fragile and prices could start plummeting again in coming months if banks flood the market with repossessed homes, a new report warns.

The Myhome.ie Property Barometer Q3 2013 report, covering the period from July to September, confirms that the market is stabilising, with the pace of decline in asking prices falling to its lowest level in six years.

The average asking price for a house is now about €240,000 in Dublin, up 0.9 per cent in the quarter, and almost €191,000 nationally.

But Caroline Kelleher of DKM Economic Consultants, who analysed the data in the report, warns that "the mild recovery in asking prices in Dublin may be stymied by repossessions in coming months".

She said much of the Dublin recovery was being driven by a restricted supply of homes coming to the market, with the fear of losing their tracker mortgages holding many people back. She said stock levels are “approximately half” what is needed for a functioning market.