Average house prices throughout the country rose at a slower rate during July, latest figures show.

The cost of buying a home increased 2% during the month, down from the 2.9% rise during June, a Central Statistics Office report reveals.

And while prices in Dublin continue to climb - up 2.7% during July - they are increasing at a slower rate than each of the previous three months.

Property prices in the capital are now on average 23.2% higher than they were at the same time last year.

Nationally, the price of a home is up 13.4% compared to 12 months ago.

However, the countrywide figure is skewed by Dublin, where a shortage of housing has been blamed for ramping up prices and the national average.

When the capital city is taken out of the equation, house prices in the rest of the country rose just 1.3% during July and are only 4.9% higher than the same month last year.

Housing Minister Paudie Coffey said the Government realises lack of housing is driving up prices in the capital and claimed it was working on boosting the construction industry.

But despite 70,000 former builders on the dole, he signalled a cautious approach was necessary.

"We can't go back to boom and bust economics and we must be careful about how we manage a sustainable recovery in the construction sector and guard against any over-dependence on this sector to grow our economy again," he said.

"We must look to encourage an increase in the number of houses being built as there is a housing need, in particular in the Dublin region."