REFILE-Australia home prices rise, caution on mining slowdown-survey

(Corrects dateline from July 18)

SYDNEY, Sept 3 (Reuters) - Home prices in Australia's major cities rose 1.6 percent in the latest quarter as lower interest rates boosted affordability, but a slowdown in the mining sector could hamper buyers' confidence, an industry report said on Monday.

Dwelling values in Sydney, Australia's most expensive city with a median price of A$530,000 ($547,700), rose 2.4 percent in the three months to August, property consultant RP Data-Rismark said. Home prices in Melbourne rose 2.5 percent in the quarter after falling 5.1 percent in the first five months of the year.

"Improved affordability since June has helped dwelling values rise across every capital city over the three months ending August 2012, apart from Adelaide," Tim Lawless, RP Data research director, said in a release.

The Reserve Bank of Australia cut its cash rate to 3.5 percent in June, the lowest since December 2009.

Australian households are highly sensitive to mortgage rates as over a third have home loans, most of which are variable. Mortgage debt totals around A$1.2 trillion, or 1.5 times household disposable income. A reduction of 25 basis points in the standard variable mortgage rates saves an average borrower about A$540 a year.

For the month of August, average dwelling values in Australia's capital cities were flat, according to the data.

Lawless said an increase in new supply over Australia's Spring months may bring some headwinds for the market, while a slowdown in the mining sector could also affect sales, especially in the mining states.

"The slowdown in the mining sector will probably have the most immediate impact on buyer confidence, which is likely to have a flow-on effect on the number of sales transacting in the market," he said.

Perth in Western Australia remained solid, with fewer homes available for sale and vacancy rates at below 2 percent, but Adelaide could be affected by BHP Billiton's decision to shelve its planned $20 billion Olympic Dam expansion, Lawless said. ($1 = 0.9676 Australian dollars) (Reporting by Eriko Amaha; Editing by Richard Pullin and Paul Tait)