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Date Published : Wednesday, May 14, 2008
The rapid growth of house prices across Australia has slowed during 2008 as high interest rates start to bite into the finances of millions of homeowners, according to new federal government figures.
Data from the Australian Bureau of Statistics (ABS) found that house prices jumped by 14 per cent in the year to the end of March - but that growth slowed in the first quarter of this year.
The ABS house price index, which measures growth in the capital cities and suburbs, grew just 1.1 per cent in the first quarter of 2008.
During this time, interest rates set by the Reserve Bank increased twice to 7.25 per cent - their highest level for some 12 years.
Despite this, the outlook is still promising for many of the major centres, with Melbourne house prices increasing by 25.9 per cent for the year - with an above average rise of 4.1 per cent in the March quarter.
Meanwhile, Adelaide posted a 21.6 per cent rise over the year, while homes in Brisbane increased in value by 20.8 per cent.
However, Perth prices edged up only 0.6 per cent for the year and fell by the same figure in the first three months of the year and home loans became harder to afford.
ANZ economist Alex Joiner told news.com.au: "This slowdown is welcome after what had been frenetic activity in most state capitals in the second half of 2007 which saw price growth accelerate rapidly and affordability deteriorate to levels not seen since the late 1980's.
"Inevitably, high interest rates have tempered price growth.
"But going forward we do not expect any sustained falls in aggregate prices unless we see a significant rise in unemployment leading to forced sales."
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