When the Reserve Bank of Australia cut interest rates last month there was always a risk that it might reinflate the housing bubble. It was a risk the central bank was prepared to take.
But a new spike in prices over the past month suggests the housing soufflé has started to rise yet again.
The unexpected leap in the value of homes has taken the annual growth rate to 10 per cent across the board and to more than 13 per cent in Sydney and Melbourne, according to CoreLogic’s home value index. And it has taken the median dwelling price in Sydney to $782,000 and in Melbourne to $590,000.
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If house prices continue to move up solidly it will make for a very difficult decision on what to do with interest rates. Photo: Erin Jonasson