International property prices ‘to surge in Australia’

15/10/2009, Written by Jamie Musk, Halifax
International property prices ‘to surge in Australia’

Australian property prices should continue to rise strongly, despite a recent rise in interest rates, it has been suggested.

In an article on the subject, the Australian newspaper noted that a recent consumer sentiment survey found 74 per cent of consumers expecting house values to rise, compared with 53 per cent in May, despite the recent monetary policy tightening.

The paper suggested that the 1.9 per cent increase seen in August’s RP Data-Rismark capital city home price index is unlikely to be sustained, but noted that long-term trends are likely to push prices up.

It identified such factors as population growth, a boom in resources and rising gross domestic product, plus a supply-side shortage as too few homes are being built.

Earlier this month, the Reserve Bank of Australia raised the cash rate from three per cent to 3.25 per cent.

However, this is still a low level by recent Australian standards, with the level having been set at four per cent or higher throughout the last 20 years and as high as 7.25 per cent before September 2008.