According to the latest figures from the Central Statistics Office (CSO), this marked the highest annual growth rate since April 2015 and it compares with an increase of 10% in the year to April and a rise of 5.4% in the 12 months to May 2016.
The figures show that Dublin residential property prices increased by 11.2% in the year to May. Dublin house prices were up 11.5%, while the price of apartments increased by 8%.
The CSO noted that the highest house-price growth of 12.4% was seen in South Dublin, while the lowest, at 6.8%, was recorded in Fingal.
Meanwhile, the increase in residential property prices in the rest of the country was even higher than Dublin, rising by 12.8% in the year to May.
House prices outside of Dublin increased by 12.2%, while apartment prices soared by 20.6%.
The Southeast region saw the greatest price growth — up 18.6% — while the Mideast region showed the lowest rate of growth, at 8.7%.
Overall, the national index is 29.5% lower than its highest level in 2007. Dublin residential property prices are 29.5% lower than their February 2007 peak, while residential property prices in the Residential properties outside of Dublin 34.7% lower than their May 2007 peak.
From the trough in early 2013, prices nationally have increased by 54.8%. In the same period, Dublin residential property prices have increased 72.5% whilst residential property prices in the rest of Ireland are 50.2% higher.
While prices rose higher outside of Dublin, the capital is re-emerging as the driving force behind rapid house-price inflation, according to Savills.
John McCartney, the company’s director of research, puts the rapid acceleration of house price inflation in Dublin down to Government policy and a chronic shortage of supply.
“The easing of loan-to-value restrictions last January, along with the introduction of Help-to-Buy, have been a greater stimulus in Dublin, where high deposit requirements were previously more of a blockage,” he said. “We are only now beginning to see the true effect of these policy changes in the figures.”
Savills is sticking with its December forecast that house price inflation will be between 8-12% across all regions of Ireland in 2017.
Property Industry Ireland (PII), the Ibec group for businesses working in the property sector, said that the CSO figures reveal the need to urgently increase the supply of housing.
PII director David Duffy said: “While there is some debate about which measure of housing supply to use, the supply of new homes coming onto the market remains well below the estimated annual average demand of 25,000 to 30,000 units, and this does not include any pent-up demand.
"Policy makers and industry must continue to work together to identify how the supply of new homes can be increased across all regions of the country.”
According to the property website Daft.ie, house prices are shooting up by €2,000 a month and the surge in prices is tempting more people to sell.
More than 6,000 properties were listed for sale in May, the highest monthly total since the middle of 2008, but experts feel this is still nowhere near enough to meet demand.