Caution as house prices rise for first time since 2007

Economists have warned against over-optimism following the first rise in house prices in five years and said the oversupply of properties and fragile labour market conditions will keep prices low.

The CSO index found the cost of homes rose by 0.2% in May, though they were still more than 15% lower than in the corresponding month last year.

That is the first increase since Sept 2007 when the index recorded a rise of 0.1%. Since then, apart from a few months where they held level, the prices have fallen steadily in each index by anywhere up to 2.7%.