Australia House Prices surpass 2008 Peak
Overseas Property News - Australia
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Australia is set for faster economic growth and shrinking budget deficits as it outperforms much of the developed world, the government announced today, feeding expectations for a rise in interest rates this week. The sweeping improvement in the government's economic forecasts came as data showed national house prices jumped to a record high last quarter, a stark contrast to countries like the United States and Britain and another reason to pull back on stimulus.
"A quarter-point rate hike looks done and dusted for tomorrow," said Brian Redican, a senior economist at Macquarie. "The strong recovery in house prices and the government's revisions, which we see as cautious, are all grist to the mill." The Reserve Bank of Australia holds its monthly policy meeting on Tuesday and is expected to lift its 3.25 percent cash rate for a second month running.
The government now sees economic growth of 1.5 percent for the year to end-June 2010, compared to a contraction of 0.5 percent just six months ago. It also markedly lowered its forecast for the peak in unemployment to 6.75 percent, down from 8.5 percent previously.
Key to that out performance was a resilient housing sector. National house prices rose 4.2 percent in the third quarter, from the previous quarter, handily topping forecasts for a 3.0 percent increase. That left prices up 6.2 percent on the year, recovering all the losses suffered during the global credit crisis and even surpassing the previous peak from early 2008.
Speaking to Investors, David Redfern founder of DSR Asset Management commented that “We have seen this coming since the beginning of the year, global interest in Australian property has been gathering momentum and is not showing any sign of abating”. We looked to Australia as a market for our investors during the last quarter of 2008, our investors have been able to take full advantage of this recovery. We do not envisage any future negative growth from any of the investments that we offer there
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