House prices, interest rates head north

Sydney house prices jumped up a record 21 per cent over the year to the end of March, according to figures released by the Australian Bureau of Statistics. Melbourne prices went up 28 per cent.

Nationally, capital city prices climbed 20 per cent over the year to March. The government is expecting the housing boom to continue, with private dwelling investment tipped to jump by 7.5 per cent next financial year.

The Commonwealth Budget papers, released yesterday show the government expects inflation to hit 3.25 per cent this June quarter. The budget papers have warned that further interest rate rises could be in store. ”Strong population growth and low vacancy rates should continue to support activity in the dwelling sector, although this is likely to be tempered by higher mortgage interest rates,” Treasury says in the budget.

Sydney Morning Herald