Perth housing market still weak

The Australian Bureau of Statistics (ABS) house price index rose 0.7 per cent in the December quarter, compared with market expectations of a 0.1 per cent fall. The December quarter result was better than the 0.3 per cent fall in the previous quarter but still indicated that house prices were showing "very sedate improvements", Commsec economist Savanth Sebastian said.

The numbers also showed that successive cash rate hikes by the Reserve Bank of Australia (RBA) in 2010 had worked, he said. Nomura Australia chief economist Stephen Roberts said the figures were stronger than expected, particularly the quarterly rises in Melbourne and Sydney.

He said the weakness in Perth may have been due to a "tail-end reaction" to the global financial crisis and expected a rebound in 2011. "I wouldn't expect Perth house prices to remain weak.”