Tony, I'm in a similar situation to yourself. Got involved in bidding wars on two properties which I lost out on. As you know, property prices have increased phenominally over the last five years. However when I did a bit more research, I found out that rents had stayed pretty constant over the same period (note, I'd been out of the country for the last few years so was a bit out of touch). I gather it's not too hard to find a place either - the queues of 2001 are no longer common place.
The way I see it now, €1200 rent will get you a similar property in a better location than €1800 mortgage repayments (25 years at around 4%). Now in the first few years that €1800 breaks down as approx €1200 in interest repayments and €600 in capital repayments. So you could argue that your €1200 is dead money either as rent or as interest.
Now, I'm somewhat bearish about the future direction of the property market in Ireland (see the "Great Financial Debates" section for more on this). But it's up to each person to make up their own mind on how they see this and what level of risk they want to take. So, if you think there is a risk that prices will not increase in the future (i.e. we get the "soft landing" many are now talking about), or even decrease somewhat, then you should only buy if you feel you would be happy living in the place for the next 10 years or so.
Because if prices don't increase you will probably end up losing money when you sell (based on the high transaction costs - stamp duty, legal fees, time involved in selling and purchasing again with more stamp duty). Of course, if prices do go up, then you don't have this problem (assuming the price for the house you're selling has gone up as much as the prices for the type of house you now wish to buy)
Seeing as I don't really know yet what I want for the next 10 years or so, and I don't expect large price increases over the next 5 years, I've decided to rent and will be looking for a new place in the coming weeks.
Good luck whatever you decide to do. It sure aint easy...