New figures from the Central Statistics Office show that residential property prices nationwide rose by 1.4% in April. This compares with a fall of 0.7% in March.

In the year to April, residential property prices nationally increased by 8.5%, up from the 7.8% rate of increase in March.

The figures were better than had been expected.

Economists say the underlying housing market is a lot stronger than the official data would suggest as the CSO figures are based on mortgage draw-downs and do not give a true sense of what is going on in the property market because they exclude cash transactions. 

According to some estate agents, cash buyers account for as much as half of activity at the moment. 

The CSO said that property prices in Dublin rose by 3.1% last month after cooling over the previous four months. They were 17.7% higher than a year ago - the fastest rate of growth on a year-on-year basis since October 2006.

Dublin house prices rose by 3.1% in the month and were 17.8% higher compared to the same time last year. Dublin apartment prices were 17.5% higher compared to April 2013, the CSO added.

However, property prices in areas outside of Dublin fell by 0.3% in April compared with an increase of 1.2% in April of last year as the Dublin housing market continues to outstrip the rest of the country.

Investec economist Philip O'Sullivan noted that prices outside of Dublin are only 2.6% above the trough and remain 47.4% below the all-time high reached in September 2007.

Dublin prices have increased by 20.9% since the trough, but remain 48.5% below the all-time high seen in 2007. 

Merrion economist Alan McQuaid said that a lack of supply of houses is clearly pushing up prices, particularly in the Dublin area.

He also noted an element of "housing froth" at the moment which is pricing first-time buyers out of the market. 

Mr McQuaid said that the other key issue remains credit availability in the economy. "An improving labour market should see the demand for credit pick up in the coming months, but that is only going to push prices up further if the supply of houses for sale doesn’t increase dramatically," he stated.