The value of Australian homes has risen for the first time in 11 months, boosted by recent interest rate cuts.
Capital city home values lifted 0.1 per cent in November, the first increase since December 2010, according to the RP Data-Rismark Home Value Index.
Regional house values also had their strongest increase since December 2010, rising by 0.3 per cent.
Rismark director Christopher Joye said the figures were an optimistic reflection of the sector's potential in 2012.
"It augurs well for housing activity during the first quarter of 2012, which we project will rebound solidly," he said.
"The best proxy for housing demand - the number of new home loans approved for purchasing established properties - has risen robustly every month since its nadir in March."
House prices still fell over the year, with a decline of 3.7 per cent in capital city values from last November.
Regional home values declined by 2.6 per cent over the twelve months to November.
There were still noted differences between house values in each state, with Sydney and Canberra reporting the strongest gains over the year.
Year on year, Brisbane led the decline in value, followed by Melbourne then Adelaide.
Darwin and Brisbane were the worst performers in November.
The data showed a positive response to the Reserve bank of Australia's (RBA) decision to cut the cash rate in November, Yellow Brick Road executive chairman Mark Bouris said.
"The November data shows that after a price drop of nearly four per cent during 2011, the market has responded quickly to the RBA's actions," he said.
"This rise is a step in the right direction and a much needed confidence builder for deflated Australian home owners."
Commsec chief economist Craig James said the market was likely to increase by around five per cent in value next year, on the back of further forecast cash rate cuts.
"The rate cuts will serve to lift demand for homes and drive property prices higher over 2012," he said.
The RBA cut cash rates in both November and December, by 25 basis points each time, to 4.25 per cent and is expected to cut again when it meets in February.
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