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Australia home prices keep rising as auctions heat up
AUSTRALIAN house prices are heading for their strongest month of gains since mid-2017 as record low interest rates and looser lending rules stoke auction demand in Sydney and Melbourne.
The recovery is welcome news for the economy after a two-year downturn ate away at household wealth and confidence, undermining consumption and business earnings.
A sustained revival in prices could also prove a saviour for the construction sector which has seen a severe downturn in new home approvals, particularly for the once red-hot apartment sector.
Monday's data from property consultant CoreLogic showed home prices across the capital cities rose 0.4 per cent last week, from the previous week, and 1.2 per cent in the month to Oct 20.
Sydney saw prices rise 0.5 per cent in the week and 1.7 per cent for the month, while Melbourne gained 0.6 per cent and 1.6 per cent respectively.
Values in Sydney were still down 3 per cent and Melbourne 2.1 per cent on a year ago, but that was a world away from the double-digit annual declines suffered earlier this year.
The pick-up came amid strength in clearance rates at property auctions, a popular method of sale in Australia's major cities, which are at their highest levels since early 2017.
More than 80 per cent of the properties in Sydney that went to auction over the weekend were sold, highs typically associated with past price bubbles. In all, there were 1,949 auctions across the major cities and 76 per cent of those were successful.
"The spring selling season is in full swing and conditions look to be strong in the two major markets with withdrawal rates low in both," Westpac senior economist Matthew Hassan said. "Recent clearance rates are consistent with price gains running at over one per cent a month - 3 per cent a quarter and a double-digit annual pace."
That would be a boon for consumer wealth and spending power given the housing stock in Australia is valued at a cool A$6.6 trillion (S$6.2 trillion), or more than three times the country's annual economic output. REUTERS