Australian house prices have edged higher in recent months but it’s too early to say if the struggling sector is in recovery.
Official data released on Tuesday showed a rise of 0.3 per cent in house prices in Australian capital cities in the September quarter, lower than economists’ expectations of a one per cent increase.
The Australian Bureau of Statistics (ABS) data also revealed a revised 0.6 per cent rise for the June quarter, while for the year to September they were up 0.3 per cent – the first annual rise since March 2011.
The increases were most evident in the mining states of Queensland and Western Australia, with lifts of 0.4 per cent and 1.8 per cent in Brisbane and Perth respectively.
Australia’s biggest housing markets of Sydney and Melbourne posted rises of 0.3 per cent and 0.2 per cent respectively.
Commonwealth Bank senior economist Michael Workman said while further house price rises could be on the cards thanks to recent interest rate cuts, poor consumer confidence could keep a dampener on any future increases.
“Mortgage rates are below their longer run averages and are most probably likely to head lower,” he said.
“On previous occasions when mortgage rates have approached current levels there has been a noticeable pick-up in housing activity.
“But consumers remain cautious which is evident in relatively weak housing lending growth.”
St George economist Janu Chan said the housing data provided some tentative optimism about the sector.
“Today’s data provides further evidence of stabilisation in the housing market, although it remains too soon to conclude a clear upswing in housing is underway Australia-wide,” she said.
“The outlook, however, is promising as the impact of lower borrowing costs continue to take effect.”
Recent interest rate cuts by the Reserve Bank of Australia (RBA) could have provided some boost in the numbers, Ms Chan said.
The cash rate was cut by half a percentage point in May and a quarter of a percentage point in both June and October.
JP Morgan’s Tom Kennedy said most of the rises were seen among in properties in the lower to middle price range.
“This was particular evident in the Sydney region, with notable price declines in clusters with median prices between $650,000 and $1,000,000 – as a reference the median price of all established homes in that city is $605,000,” he said.
“It was a similar story in Perth, with the surge in house prices generated in clusters with median prices below $700,000.”
