The number of residential property transactions rose by 14.4 per cent in the first three months of the year, according to the Irish Banking Federation’s latest Housing Market Monitor.

The report indicates there were 4,450 transactions in the first quarter of 2013 compared with 3,900 in the same period of 2012, which represents the sixth consecutive quarter of year-on-year gains in the volume of transactions.

However, mortgage approvals, an indicator of credit conditions in the mortgage market, fell by 4 per cent compared with the equivalent period last year, the first year-on-year decline since data became available in 2011.

Following the rise in mortgage drawdowns at the end of last year, the number of drawdowns in the first quarter of 2013 was 1,803, a 19 per cent decline on the figure for the first quarter of 2012, previously the lowest on record.

Goodbody economist Dermot O’Leary said: “The most obvious reason for the divergent trends between mortgages and transactions is an increased incidence of cash purchases.

“While one interpretation of this may be that credit is not available in the banking system, another is that buyers are using cash to invest in the Irish property market given the superior returns relative to ever-shrinking deposit rates in the Irish banks.”

“Either way, it is a vote of confidence that buyers are willing to dip their toes into the Irish housing market at current valuations.”