New figures from the Central Statistics Office show that residential property prices, at a national level, increased by 6.1% in the year to October.

The CSO said that residential property prices grew by 1.8% in the month of October from September.

The figures show that property prices in Dublin rose by 15% last month compared to the same time last year - the biggest increase since 2006.

Dublin house prices grew by 14.6% higher compared to a year earlier, while Dublin apartment prices were 18% higher when compared with the same month of 2012. 

However, the CSO points out that the data for apartments are based on a small number of transactions. 

The CSO also said that the price of residential properties outside of Dublin rose by 1.5% in October from September but were still 0.3% lower than the same time last year.

Despite the recovery in recent months, residential property prices nationally are still down 47% from their peak in 2007. 

"The fifth year-on-year rise in residential property prices in a row is very encouraging and is a clear sign that the housing market is recovering after more than five years in the doldrums," said Merrion economist Alan McQuaid in a commentary on today's figures. 

He said that whlle there is clearly an urban/rural divide, with Dublin performing much better than elsewhere, it would be more worrying if the trend was the other way around. He also said that talk of another property bubble is "overdone".

"The big driver in our view over the next twelve months or so will be disposable income and in particular employment prospects. The recent signs of general improvement in the labour market and on the jobs front should help sustain the housing market recovery in the short-term, especially in Dublin," the economist added.

Davy economist David McNamara noted that the low level of mortgage transactions may be adding to volatility in the property price index. He also said that a lack of supply is supporting Dublin prices.

"A lack of supply in the capital is now supporting house prices, with an influx of cash buyers compensating for weak mortgage lending and perhaps bidding up the remaining mortgage-backed buyers covered by the CSO index," he said.

Housing starts remain at exceptionally low levels, so new supply will take time to come on-stream, he added. 

Increase in number of mortgage approvals

There was a 12.3% increase in the number of mortgages approved in October when compared to the previous month, according to the Irish Banking Federation.

Almost 1,880 mortgages were approved last month, 92% of them for house purchases.

This compares to 1,673 in September and 1,677 in October 2012 - a 12% rise year-on-year.

The value of mortgage approvals during the month was €347 million - €66 million (23.5%) higher than in September.

October 2012 saw mortgage approvals worth €284 million being made, 22.3% lower than those recorded last month.