House prices have increased for the third month this year giving rise to hopes that the market may be bottoming out.

New figures from the Central Statistics Office show that nationally prices have inched up by 0.5% in August, the largest rise since the peak in 2007 and the third increase this year after rises in May and July.

The price of apartments, which have seen the largest fall since the boom  saw an increase last month of 1.3%. But the property nightmare is far from over for those who are in negative equity.

Flats in the capital are worth 63% less than they were in February five years ago.

Residential property prices in Dublin are down 0.7% month on month – overall worth 56% of what they were at the peak of the boom.

The combined houses and apartments data show prices in Dublin are now 57% below their peak while nationally house prices are worth half of what they were in 2007.

The rises, although small, have raised hopes that property prices have bottomed out in Ireland which has seen one of the worst property crashes in the world.

The data gathered by the CSO is from nine financial institutions and does not include cash transactions, which estate agents say account for a large amount of the house buying activity as banks continue to be reluctant to approve mortgages with less than a 20% deposit on offer.

Economist Alan McQuaid says research in recent months from both the Irish central bank and ESRI suggests the housing market may be close to a bottom, with signs of pent-up demand among under-35s seeking to buy a family home, especially in Dublin.

However McQuaid, who works with Merrion Stockbrokers, says it is difficult to see any significant rises on the horizon.

“On a practical level it is difficult to see people rushing out to buy a house and to make such a big monetary outlay when labour market conditions remain very fragile.

"The jobless rate is currently 14.8% and is unlikely to fall sharply any time soon,” he said.