UPDATE 1-Irish house prices rise at fastest pace in six years
* Dublin prices rise 1.9 pct m/m in August, 10.6 pct y/y
* No sign of bubble in bank lending despite rises
DUBLIN, Sept 26 (Reuters) - Dublin house prices rose by over 10 percent year-on-year in August, pushing overall Irish price growth to a six-year high and adding to concerns that a new bubble may be emerging in the capital.
House prices have begun to stabilise in Ireland over the past 18 months, five years after a crash in which property values plunged by more than half, devastating the economy and pushing Ireland into an international bailout.
Residential property prices in Dublin increased for the fifth month in a row in August, rising 1.9 percent from July to stand 10.6 percent higher on the year, figures from the Central Statistics Office showed on Thursday.
Prices outside Dublin rose by just 0.1 percent on the month and continued to fall on an annual basis, but the sharp jump in the capital was enough to push national prices up 2.8 percent, the highest annual increase since November 2007.
House prices in Dublin are still 51 percent lower than at their highest level in early 2007, with national prices 49 percent below peak.
While a senior executive from the state's National Asset Management Agency (NAMA) this week added his voice to concerns over a shortage of housing in key areas, others said the lack of mortgage lending should act as a buffer to continued price rises.
With cash buyers snapping up every second home, only one in every two mortgages approved are being drawn, according to the Irish Banking Federation, leaving the number of drawdowns at the same level as a year ago despite the sharp price rises.
"Is it concerning? Well it's being driven by cash buyers to a large extent and you're not seeing enormous improvements in mortgage drawdowns so you could hardly say there's a bubble in bank lending," said Conall Mac Coille, chief economist at Davy Stockbrokers.
"If you're thinking about macroeconomic policy, it's more the volume of lending that you'd worry about rather than the price. We don't think the people who are taking out mortgages are being stretched in terms of affordability."
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