House prices outside Dublin are now rising at their fastest rate for seven years, suggesting recovery in the market is no longer confined to the capital.
The latest official figures show residential property prices outside of Dublin rose by 4.9 per cent in 12 months to July, up from a rate of 3 per cent in June and 1.8 per cent in May.
This is the highest rate of house price inflation recorded outside the capital since 2007.
Despite the acceleration, prices outside Dublin are still on average 43 per cent below their 2007 pre-crash peak.
The Residential Property Price Index, compiled by the Central Statistic Office (CSO), suggests residential prices nationally rose by 2 per cent , and were 13.4 per cent higher on an annual basis.
Dublin accounted for the main bulk of the increases with prices in the capital 23.2 per cent higher than a year ago. However, the 2.7 per cent monthly rise in Dublin prices was slowest rate of increase in three months.
Dublin house prices rose by 2.5 per cent in July and were 23.1 per cent higher compared with a year earlier, while apartment prices in the capital were 26.3 per cent higher on an annual basis.
However, the CSO cautioned that its data for apartments were based on low volume of trades and were subject to a high degree of volatility.
Despite the recovery in values witnessed over the past two years, house prices in Dublin remain on average 41.2 per cent lower than their 2007 peak, while apartments are still 48.4 per cent lower than their boom-time high.
Davy analyst David McNamara said property price inflation was still being driven by cash buyers rather than mortgage lending, as evidenced by the fact that the former accounted for 50 per cent of all transactions.
“With little new supply coming on stream, prices have trended upwards, and this could persist until construction ramps up to meet demand,” he added.
Property Industry Ireland, the group which represents businesses in the property and construction sectors, said the latest set of numbers further highlighted the serious supply problems in the market.
Director Peter Stafford said: "The figures show the real impact of a lack of new supply into the housing market. With no new major housing schemes in urban areas reaching the market, and interest amongst buyers improving, it is not surprising that prices continue to rise so fast, especially in Dublin."
The Government has pledged to announce measures aimed at boosting supply, particularly in Dublin where pressure on prices is at its strongest .
In addition, the National Asset Management Agency said it plans to invest €1.5 billion to develop housing in Dublin.
