Interest rate cuts push up home prices
SUCCESSIVE interest rate cuts have helped turn around falling home prices across Australian capital cities.
CAPITAL city house prices have emerged from the doldrums recording their largest monthly increase in two years.
Successive interest rate cuts have helped turn around falling home prices across Australia, according to the latest property data.
The RP-Data-Rismark Home Value Index recorded an average one per cent increase in home values across the eight capital cities in June - the strongest single monthly result since March 2010 - partially reversing a 5.3 per cent fall in the 12 months to May.
Hobart recorded the sharpest increase, with prices climbing 2.7 per cent, followed by Perth and Canberra where prices rose two per cent.
Prices in Sydney, Melbourne and Brisbane increased by an average of one per cent.
The worst performers were Adelaide (down 1.1 per cent) and Darwin (down 0.7 per cent)
RP Data research director Tim Lawless said the Reserve Bank of Australia's May and June official interest rate cuts had helped spur demand in the property market.
"The catalyst for improvement in market conditions is likely to have been the 55 basis point reduction in the average discounted home rate over May and June,'' he said.
The median dwelling price across all capitals was $460,000 in June.
The RBA has cut 125 basis points from the cash rate since November last year to boost the domestic economy and insulate consumer confidence from the European financial crisis
The cuts include 25 basis points sliced from the cash rate in June to 3.5 per cent.
Rates on hold
The RBA is not expected to make it three in a row when it meets tomorrow after rate reductions in May and June.
A survey of 21 economists found that none expect the RBA to cut rates in July.
Economists’ expectations are centred on just one more cut this year, bringing the cash rate to 3.25 per cent.
Property snapshot for June
• Best performing capital city: Hobart +2.7 per cent
• Weakest performing capital city: Adelaide, -1.1 per cent
• Highest rental yields: Darwin houses with gross rental yield of 6.1 per cent and Darwin Units at 6.1 per cent
• Lowest rental yields: Melbourne houses with gross rental yields of 3.7 per cent and Melbourne units at 4.5 per cent
Source: The RP-Data-Rismark Home Value Index