Capital city house prices rose by 1.6 per cent in September and by 3.7 per cent in the third quarter, resting at 5.5 per cent higher for the year.
HSBC chief economist Paul Bloxham said the Reserve Bank of Australia (RBA) would be less willing to cut interest rates any further now that a “local housing boom” is underway.
Mr Bloxham made the comments as the RBA announced its decision to keep interest rates on hold for the month of October.
The housing market is being supported by low interest rates, with the RBA’s official cash rate sitting at a 53-year low, he said.
“The lift in the housing market is occurring despite weak employment growth in recent months and the drift upwards in the unemployment rate,” Mr Bloxham said.
He also noted that the house price data released yesterday were accompanied by a modest rise in retail sales data and a lift in consumer sentiment in the past two months. Retail sales rose by 0.4 per cent in August, 0.3 per cent in the three months to August and 2.3 per cent year-on-year.
“A rising housing market is likely to be one factor contributing to a recent lift in consumer confidence,” Mr Bloxham said.
