House prices rose marginally in the December quarter but showed continued weakness in Brisbane and Perth, economists say.
The Australian Bureau of Statistics (ABS) said its 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.
"It's more important to look at the trend than the number," Mr Sebastian said. "If anything, the trend is (indicating) that prices are showing modest improvements overall." The numbers also showed that successive cash rate hikes by the Reserve Bank of Australia (RBA) in 2010 had worked, he said.
"It highlights to the Reserve Bank that they don't need to raise rates. "Rates should remain on hold today (when the RBA board meets) and over the next couple of months, just on the back of this."
House prices in Brisbane rose by 0.7 per cent in the quarter and fell by 3.2 per cent in Perth. The disappointing Brisbane and Perth data was consistent with a RP Data-Rismark Hedonic survey, released on Monday, Mr Sebastian said.
Nomura Australia chief economist Stephen Roberts said while the data may not be a factor for the RBA at present, it may affect interest rates over the year. "I think it adds to the factors, which suggests interest rates by the middle to second half of this year will be rising again," he said.
Mr Roberts said the figures were stronger than expected, particularly the quarterly rises in Melbourne and Sydney.
"I think most of us hadn't allowed for quite the degree of resilience in the bigger capital cities
"These are all reasonably sizeable quarterly increases. "They had moderated, but they haven't flattened out as appeared to be the case in some of the private real estate data."
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. "If anything, they may be weakest this year, but will quite possibly turn out to be one of the stronger housing centres over the course of the next 12 months."
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