Australian House Prices Advance on Strength in Mining States
Australian home prices rose for a second straight quarter, the first back-to-back increase since 2010, led by gains in the capitals of states at the center of the nation’s mining boom.
An index measuring the weighted average of house prices in eight major cities advanced 0.3 percent in the third quarter from the previous three months, when it rose a revised 0.6 percent, the Australian Bureau of Statistics said in Sydney today. The median estimate of 15 economists surveyed by Bloomberg News was a 1 percent rise.
The data reflects 1.25 percentage points of interest rate cuts by the RBA from November to June, which have helped boost consumer confidence, home lending and building approvals. Governor Glenn Stevens resumed reductions in borrowing costs last month, as he seeks to strengthen areas outside the resources industry -- where investment is expected to peak at a lower level than previously expected next year -- and traders are pricing in a 50-50 chance of a rate cut today.
“Although it was below expectations, the data does provide further evidence of a stabilization in house prices,” said Janu Chan, an economist at St. George Bank Ltd. in Sydney. “The outlook for housing is promising, given that the lower borrowing costs are having an impact and the Reserve Bank of Australia has hinted that it wants housing to improve and that’s suggesting that it will adjust monetary policy to do so.”
Prices rose 1.8 percent in Perth, 0.4 percent in Brisbane and 0.3 percent in Sydney in the third quarter from the prior three months, the report showed. They declined 1.1 percent in Canberra and dropped 0.6 percent in Adelaide, it showed.
The local currency was little changed after the data, trading at $1.0370 at 12:34 p.m. in Sydney.
“Lower-than-average interest rates are providing some support to demand in the economy,” RBA Deputy Governor Philip Lowe said in an Oct. 30 speech. “There is also some sign that they have led to a slight improvement in the property market.”
Prices climbed 0.3 percent in the September quarter from a year ago, today’s figures showed. Darwin rose the most, jumping 8.2 percent, followed by Perth with a 4.4 percent gain. Melbourne saw the biggest drop, at 2.3 percent, the seventh straight quarter of declines, the data showed.
Home and apartment prices fell 1 percent in October, following four months of gains, highlighting a “delicately balanced” market, Brisbane-based researcher RP Data said last week. Prices of detached houses slipped 1 percent in October, while apartment prices slid 0.6 percent, it said.
The number of permits granted to build or renovate houses and apartments surged 12 percent in September from a year earlier, and climbed 7.8 percent from August, statistics bureau data showed.
Consumer confidence in the nation rose 1 percent to 99.2, the Westpac Banking Corp. and Melbourne Institute survey taken during the first week of October showed. Australian home loan approvals gained 1.8 percent in August from the prior month, the most since November 2011, as buyers responded to the RBA’s interest rate cuts.
“The Reserve Bank of Australia are aware that there are preliminary signs of life in the housing market,” Ben Jarman, a Sydney-based economist at JPMorgan Chase & Co., said in an e- mail. “But conditions certainly aren’t strong enough yet to constrain them from cutting rates further.”
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