The trend of rising property prices was reversed last month as the cost of buying a home fell by 1.4% nationally, according to the latest figures from the Central Statistics Office.
Despite the drop, residential property prices remain 15.5% higher than they were a year ago.
Prices in Dublin fell by 1.9% in January - the most significant monthly fall since early 2012.
But the cost of buying a home in the capital is still 21.6% higher than 12 months ago.
Dublin house prices fell by 2.1%, while apartment prices rose by 0.9%, although the number apartment transactions were low.
Outside of Dublin, prices fell by a more modest 0.9% in January.
The overall decline since the 2007 peak is 38.5%.
Commenting on today's figures, Merrion economist Alan McQuaid said that January is traditionally a bad month for house prices due to the poor weather conditions.
But the economist said the big question this time is whether there is more to the decline than just that, given the tighter lending restrictions imposed by the Central Bank.
"We will have to wait another few months before we can make a clear judgement," he stated.
He also said that the CSO figures are based on mortgage draw-downs only, and do not take into account cash transactions.
The underlying health of the market and the rise in house prices is stronger than the official data would suggest, he adds.