Latest NewsHome Prices Surge Record 20%Saturday, 14 January 2017

Capital city home prices rose by a record 20 per cent in the year to the end of March, giving the Reserve Bank more reason to lift interest rates tomorrow.
For the quarter alone, home prices rose 4.8 per cent, easing from a revised 5.1 per cent recorded for the December, the Australian Bureau of Statistics said today. The annual pace compared with the revised 13.5 per cent gain for all of 2009, indicating house price increases are accelerating.

Home prices have been driven by a swelling population and a shortage of affordable housing.

The gain in the year to March was the most since the current series began in 2002, according to Bloomberg data.

''This is certainly an indication of a buoyant economy at least for those who can afford a house,'' Mr Williamson said.

Among the capitals, Melbourne led gains both on a quarterly and annual basis, with prices rising 6.7 per cent and 27.7 per cent, respectively.

In Sydney, prices rose 21 per cent for the year and 5.3 per cent for the quarter. Perth's annual prices jumped 15 per cent, and 3.5 per cent for the quarter.

Brisbane's prices, meanwhile, rose 12.1 per cent for the year and 2 per cent in the quarter.

''It's a massive increase in the house price index,'' said Arab Bank Australia David Scutt. ``Lock in another rate hike tomorrow.''

The surging home prices come amid signs of an economy expanding rapidly, fuelling fears of unsustainable growth.

TD Securities/Melbourne Institute monthly inflation gauge, released today, showed that in the year to April, inflation increased 2.9 per cent - the most in 14 months. That tally also bumps up against the RBA's preferred maximum of 3 per cent.

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