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Australian Capital City House Prices Rise

06 Aug 2012 - Four C Realty

The slump in house prices appears to have bottomed and the market is set to improve again, underpinned by recent interest rate cuts. Australian capital city house prices rose 0.5 per cent in the June quarter, outpacing economists' expectations for a 0.7 per cent fall, the
Australian Bureau of Statistics said on Wednesday.

National Australia Bank senior economist Spiros Papadopoulos said future prices will be driven by consumer confidence and job security.

"So far this year, the uncertain economic environment and low consumer confidence has impacted on demand, but policymakers will be hoping that lower interest rates - and expectations of further cuts - will help stabilise house prices," he said.

Likelihood of August interest rate cut one in five

The futures market estimates the chance of a cut in the cash rate from its current 3.5 per cent to 3.25 per cent at the meeting on August 7 at just one in five, due to expectations of steady growth in the Australian economy.

Supporting data

Credit provided by financial intermediaries rose by 0.3% in June

Growth over the year to June was 4.4 per cent - up from the low of just 1.0 per cent over the year to November 2009.

Residential approvals edged back only modestly, by 2.5 per cent, in June, thereby sustaining most of the 27 per cent jump the month before.