House prices rose 7.2 per cent in the 12 months to the end of October and the rate of increase is accelerating, reversing a trend in the first half of the year.
The Permanent TSB/ESRI house price index shows the annualised increase in price jumped one percentage point from the end of September.
The rate of the increase in house prices in the four months to October was 4.2 per cent. This was greater than in the first half of the year, when prices rose 2.6 per cent.
The index also indicated that prices for first-time buyers continue to rise faster than for other areas of the housing market. Prices for first-time buyers have now risen a full four percentage points more so far this year than price growth generally.
Part of the reason for this is that an increasing proportion of first-time buyers are buying existing as opposed to new houses.
The price of houses for first time buyers rose by 10.8 per cent in the first 10 months of the year, compared to 6.1 per cent for second time buyers.
During October house prices generally rose by 1.2 per cent, up from 1 per cent in September. The average price paid for a house in October was €271,385.
"Last year price growth was stronger in the first than in the second half of the year. This year the reverse is happening," said Niall O'Grady, head of marketing at Permanent TSB.
"While we still expect a relatively moderate level of price growth overall for the year, it's more difficult to forecast how 2006 will develop on the basis of these figures.
"And of course we've yet to see the impact of the expected rise in interest rates later this week. What we can say with some certainty however is that there's certainly plenty of life left in the Irish housing market."
In the 12 months to October house prices in Dublin grew by 8.1 per cent. Outside Dublin growth was 6.1 per cent.
A new study on houses by the OECD suggests that houses in the Republic may be overvalued by as much as 15 per cent.
The study, Recent House Price Developments: The Role of Fundamentals, reviews the upward trend in real house prices in recent years internationally.
The study found that recent research indicated prices were broadly in line with identified main determinants in a number of countries but "uniformly point to significant overvaluation in the UK, Ireland and Spain".
It found that while mortgage debt burdens had been increasing, the ability to service the debt had been relatively stable in a number of countries, including Ireland, largely as a result of lower interest rates.
Using another measure, the price to rent ratio, which compares the cost of owning versus renting a house, the study found the ratio is more than 100 per cent above its long-term average in Ireland.
Comparing actual price to rent ratios with the user cost of housing over the past ten years, the study found that Irish housing could be overvalued by as much as 15.4 per cent (a 2004 figure). However it cautioned that the exercise gives only an approximate indicator of overvaluation .
