Consumer confidence increased significantly in the first half of this year despite falling disposable incomes, a decline in consumer spending and subdued mortgage lending.

According to the Consumer Market Monitor from UCD Michael Smurfit Graduate Business School and the Marketing Institute of Ireland, confidence improved by five points in the first half of 2013 compared with the same period last year.

Mary Lambkin, professor of marketing at UCD, says the index gives reason for “optimism about future spending”, though she noted consumers are “taking a cautious approach, continuing to pay down debt rather than spending”. The average credit card debt in Ireland is €1,275, although Irish households remain among the most indebted in Europe.

Disposable income slid 3.7 per cent as a result of new household and property taxes, putting pressure on consumer spending, which continues to fall.

Property transactions are on the rise, however, with the number of properties bought in the first three months of 2013 up by 13 per cent on the same period in 2012.