The head of the European Commission finance department, Pierre Moscovici, says the housing market in Ireland will be thoroughly examined by commission officials.
In a letter to Irish MEP Brian Hayes, Mr Moscovici says this will be done during a surveillance trip to Ireland this week.
This is the 7th post-bailout surveillance mission to Ireland by the commission.
According to the European Commission, the only solution to the problem is to build adequate supply.
Brian Hayes says the Government's 2020 housing strategy is addressing this issue - but it will take time to improve the most affected areas like Dublin where rents have skyrocketed in the last few years.
"Last night I got a very interesting reply to a question from Pierre Moscovici, the economics commissioner, and he has highlighted the problem of house price inflation in Ireland is a concern for the commission.
"The commission are back in Dublin today until Friday, with post-programme surveillance as a consequence of the funds that were put into Ireland during the Irish bailout and the period thereafter.
"He's highlighted house price inflation, the necessity to ramp up the supply of housing, and also the necessity to curtail rent inflation which is also rampant in my own constituency of Dublin".
