These figures come on top of a 1.2% rise in June and a decrease of 13.6% recorded in the 12 months to July 2012 showing that the recovery has started in the last few months.
The data from the Central Statistics Office suggests that Dublin is leading the recovery with prices up by 3.3% in July and they are now 8% higher than a year ago.
Dublin house prices grew 3.6% in the month and are 7.5% higher compared to a year earlier while apartment prices are now 11.6% higher than the same month of 2012.
However, the CSO said that it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series.
It could take some time for the recovery being seen in Dublin to spread across the rest of the country. The price of residential properties in the rest of Ireland fell by 0.1% in July compared with an increase of 0.3% in July last year. Prices were 1.5% lower than in July 2012.
And prices still have a long way to go to recover lost ground. House prices in Dublin are 52% lower than at their highest level in early 2007 just before the economic crash. Apartment prices in Dublin are 59% lower than they were in February 2007.
Overall residential property prices in Dublin are 54% lower than at their highest level in February 2007. The fall in the price of residential properties in the rest of Ireland is somewhat lower at 48%. Overall, the national index is 49% lower than its highest level in 2007.
According to property experts the rise in prices in Dublin is caused by a lack of supply. There is a shortage of family homes in Dublin, particularly in the south of the city, and it means that people are being priced out of the market. Some real estate agents say that prices have actually climbed by around 20% in the most sought after area.
Property experts report that up to 100 people are showing up for each viewing, such is the demand for even modest three bed properties. Also owners are reluctant to put their properties on the market because prices are low and also because lending conditions are difficult.
According to broker Karl Deeter thousands of people with mortgage approval were finding that Dublin prices are moving beyond the amount the banks were prepared to lend them. There are concerns that the shortage of supply could create a new housing bubble in the Dublin area.
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