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Australian home prices boast biggest monthly increase since 2015
AUSTRALIAN home prices boasted their biggest monthly increase since mid-2015 in October as record-low interest rates and looser lending standards stoked demand in the hard-hit sector.
That was the fourth straight month of gains and a boon for the economy after a two-year downturn chipped away at household wealth and confidence, undermining consumption and business earnings.
It was also the clearest sign yet that the Reserve Bank of Australia's (RBA) easing campaign was gaining traction, having cut rates three times to just 0.75 per cent.
The central bank holds its November policy meeting next week and is widely expected to stand pat as it gauges the full impact of the easing.
Friday's data from property consultant CoreLogic showed home prices across the nation rose 1.2 per cent in October, from the previous month, the sharpest rise since May 2015.
Prices across the capital cities rose 1.4 per cent in the month, led by a 2.3 per cent surge in Melbourne - the best performance since 2009 - and a 1.7 per cent jump in Sydney.
For the three months to end October, values climbed 5.5 per cent in Melbourne and 5 per cent in Sydney.
Values in Sydney were still down 2.5 per cent from a year ago, and Melbourne one per cent, but that was a world away from the double-digit pace of decline suffered earlier this year.
"It's becoming increasingly clear that the housing market rebound is gathering pace, both geographically and across the broad valuation cohorts, off the back of lower mortgage rates and improved access to credit," said CoreLogic research director Tim Lawless.
That would be a windfall for consumer wealth and spending power given the housing stock in Australia is valued at a cool A$6.6 trillion (S$6.1 trillion), or more than three times the country's annual economic output.
A sustained rebound 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.
The pick up came amid strong demand at auctions, a popular method of sale in Australia's major cities, which hit their highest of the year last weekend.
More than 75 per cent of the properties in Sydney that went to auction over the weekend were sold, highs typically associated with past price bubbles. REUTERS