SYDNEY, April 1 Home prices across Australia's
major cities jumped by 2.3 percent in March while gains became
more broad-based, a strong result that will fan concerns
speculative buying is running too hot for policy makers'
Figures from property consultant RPData-Rismark showed
overall dwelling prices were up 10.6 percent compared to March
last year, led by 15.6 percent growth in Sydney.
The gains were also broader with every major city recording
a monthly increase in March. Over the whole first quarter,
Melbourne boasted an increase of 5.4 percent, while Sydney added
4.4 percent and Brisbane 1.5 percent.
"Over the long term, I don't believe such a strong pace of
growth can be sustained - we expect housing market conditions to
cool down as the year progresses," said RP Data research
director Tim Lawless.
"If the pace of capital gains doesn't slow, we may see
higher interest rates realised much earlier than previously
Rising home prices have so far been considered by
policymakers as necessary to encourage a much-needed revival in
home building, which is indeed underway.
The Reserve Bank of Australia (RBA), which cut interest
rates to an historic low of 2.5 percent last August, has been
counting on home construction to provide vital support to the
economy as a long boom in mining investment cools.
Yet the central bank has become more concerned about a surge
in borrowing to buy homes for investment, warning that
double-digit price increases cannot be sustained.
Prices have already risen well ahead of rental yields, with
the typical capital city house providing a gross yield of just
3.8 percent and units 4.6 percent.
While capital city home values were up 12.5 percent since
May last year, weekly rents increased by just 1.8 percent.
The premium market remained the best performer. Dwelling
values across the most expensive quarter of the market were up
7.2 percent over the past six months while the lower priced
quarter saw values lift by 4.9 percent.
(Reporting by Wayne Cole; Editing by Shri Navaratnam)