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House prices in Australia’s major cities rise
4 Sep
House prices in Sydney and Melbourne in August have risen to their highest monthly figure since 2017, driven by record low interest rates and looser lending rules.

As 9News reports, the optimistic results follow two years of prices dropping, which dragged household wealth, confidence and the economy down too.

A Reuters poll indicated that government figures set to be released this week will likely reveal the economy grew by 1.4% in the year to June, which is the slowest pace seen in a decade.

Prices increasing again would also be beneficial for the construction sector, which experienced a significant slowdown in new home approvals, especially in the apartment sector.

Property consultant CoreLogic revealed that home prices across the capital cities increased by 1.0% in August, and values for the whole nation increased by 0.8%.

These figures mark the greatest increase seen since April 2017 and the first since October of 2017.

Sydney’s market witnessed a 1.6% increase while Melbourne’s grew by 1.4%. On a yearly basis, prices were still down for both cities, but much less than earlier this year.

CoreLogic research director Tim Lawless said: "The significant lift in values over the month aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low.

"It's likely that buyer demand and confidence is responding to the positive effect of a stable federal government, as well lower interest rates, tax cuts and a subtle easing in credit policy."

This follows the Reserve Bank of Australia’s decision to cut interest rates to a record low 1% in June and July, also stating that further cuts would ensue if necessary. The markets indicate another two potential cuts to 0.5% by March 2020.

Meanwhile, the number of properties listed has not yet improved much, although the Australian springtime may witness a change in pattern.

Westpac senior economist Matthew Hassan said: "On listings, both markets are starting to see a clear rise heading into the spring selling season, which officially starts next weekend.

"That said the uplift is only slightly stronger than the typical seasonal rise - with new listings coming from an extremely low starting point that suggests supply will remain relatively tight unless there is a sudden lift in the next few weeks."

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