RESIDENTIAL PROPERTY prices in the Republic increased for the second consecutive month in August sparking hopes that the market may be stabilising, although the yearly declines still remain precipitous.

The latest figures from the Central Statistics Office show that residential house prices increased by 0.5 per cent in August compared with a 0.2 per cent rise in July. However, figures also show that prices across the State have fallen 12 per cent over the last year.

The CSO figures, now widely considered to be the benchmark of property prices in the Republic, are based on mortgages, but do not take into account cash transactions.

The index records prices by type of property and location, and in Dublin prices were 0.5 per cent lower in August and have fallen 13.8 per cent over the last 12 months. House prices in the capital were 14.4 per cent lower last month compared with August 2011 while apartments were down 13.4 per cent. To date, Dublin house prices have fallen 56 per cent from their peak, reached in early 2007 while apartments have fallen by 63 per cent.

The news is better elsewhere. Outside Dublin the price of homes is down an average of 10.7 per cent year on year and showed a 1.3 per cent rise in August. Overall, prices have declined outside Dublin by 46 per cent since the 2007 peak of the property boom.

While the figures are hardly positive, Merrion Stockbrokers said they may not be as bad as they look given that they are based on mortgage drawdowns and do not include cash transactions.

“According to estate agents, around 40 per cent of activity in the housing market at the moment is being done through cash, which suggests things may be stronger than the CSO numbers indicate,” Merrion’s Alan McQuaid said. “Furthermore, research in recent months from both the Irish central bank and ESRI has concluded that the housing market may be close to a bottom, with signs of pent-up demand among under-35s seeking to buy a family home, especially in Dublin.”