House prices increased at their fastest rate in more than 18 months in August, defying predictions of a corona-induced slowdown in the property market.

The cost of homes excluding newbuilds was 8.2% higher than 12 months ago, passing the 8% mark for the first time since January 2019, according to the latest CBS figures.

Homes have now increased in value by more than 50% since June 2013, which marked the end of a five-year slump.

The number of transactions in August was 3% fewer than a year ago, but in the first eight months of the year 5% more homes changed hands.

The government is raising the limit for the national mortgage guarantee from €310,000 to €325,000 next year to reflect the rise in prices. Owners who borrow extra money to finance energy saving measures receive an extra 6 per cent cover, raising the ceiling to €344,500.

The mortgage guarantee is a government scheme that covers homeowners’ losses if they have to sell their house for less than the outstanding mortgage because of divorce, illness or unemployment.

Homeowners pay a surcharge of 0.7% on their mortgage to cover the cost of the scheme, but are often able to borrow at lower rates because of the reduced risk.