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Strong Australian house price growth fuels concerns of property bubble

Xinhua, June 23, 2015 Adjust font size:

Australian house prices rose strongly in the first quarter of the year, fuelling growing concerns of a property bubble.

Record-low interest rates fed the growth in capital city values.

The Australian Bureau of Statistics (ABS) figures showed that house prices grew 1.6 percent in the three months to March.

Over the year, house prices in capital cities have increased by 6.9 percent.

Concerns of a speculative property bubble in Sydney and Melbourne have grown recently, as the low interest rates led to rapid growth in city property investing.

The central Reserve Bank of Australia (RBA) cut the official cash rate from 2.25 percent in February to 2 percent in May.

The ABS figures showed a rise of 3.1 percent in Sydney, and a surge of 13.1 percent over the year.

In Melbourne house prices lifted 0.6 percent in the quarter and 4.7 percent over the year.

The RBA and the Australian Prudential Regulation Authority, are monitoring activity in the property markets.

Some lenders have moved to end investor-lending discounts on home loans.

Treasury Secretary John Fraser recently told a parliamentary committee that there was "unequivocally" a housing bubble in Sydney, while RBA governor Glenn Stevens remarked that house prices in some pockets of the market were "crazy."

The ABS figures showed Brisbane house prices increased 0.4 percent over the March quarter, and by 3.9 percent over the year.

Adelaide posted a lift of 0.7 percent for the quarter and 2.5 percent for the year, while house prices in Canberra gained 1.1 percent in the quarter, and 3 percent over the year.

Hobart house prices lifted 0.5 percent in the quarter, and 1.9 percent in the year.

Perth bucked the trend, recording a 0.1 percent fall in the quarter, resulting in a 12 month house price dip of 0.3 percent.

That was due to the declining mining boom.

In Darwin, house prices also fell by 0.2 percent in the three months to March and by 0.4 percent over the year.

Overall the average price of an Australian home was 576,100 Australian dollars (444,000 U.S. dollars), the ABS said. Endi