Residential property prices rose across the country last month, according to the Central Statistics Office, with national prices now 13.4% higher than in July 2013.

Nationally, residential prices rose by 2% during the month of July when compared to June.

Dublin accounted for the bulk of the increases, with property prices there 23.2% higher than in the same month of 2013.

Prices in Dublin rose by 2.7% in July, which is a slightly slower pace than had been recorded in the previous three months.

Meanwhile in the rest of the country, residential property prices were 4.9% higher year-on-year, according to the figures, following a 1.3% increase in July.

This marks the third successive month of growth in property prices outside Dublin.

Despite strong gains in the past year, property prices are still significantly lower than at their peak in September 2007.

Merrion chief economist Alan McQuaid pointed out that Dublin house prices were still over 41% lower than they were at the peak of the market seven and a half years ago, while prices for the whole of Ireland remain 42.3% off their peak values.

"The generally improving economic backdrop should help to sustain the house price recovery in the short-term even with limited credit availability for potential buyers," Mr McQuaid said. 

"As regards this year, and based on the figures for the first seven months of 2014, we now see an average rise in Irish house prices of around 12%, with Dublin posting the biggest increase of over 20%," he added.

Philip O'Sullivan, chief economist with Investec, pointed out that the year-on-year increase in July was the highest annual rate of change in prices since April 2007. 

"There is a sense of déjà vu about the moves, given the well-documented two-speed recovery in residential prices in Ireland," he said.

"An overhang of excess units in some local markets means that the 'National ex Dublin' price index is likely to continue to lag Dublin for the foreseeable future," he predicted.

Dermot O'Leary of Goodbody said the data contained some familiar trends with house price inflation continuing to accelerate on the back of dwindling supply.

He added that the gap between Dublin and the rest of the country was likely to continue to grow over the coming quarters. 

"Price inflation of the scale seen recently in the Dublin market is indicative of a market that is clearly not in equilibrium. Given the time lags involved in construction, this disequilibrium is likely to be maintained in the short-term," he said.