AUSTRALIAN house prices may be on the rebound with the latest house price index rising 4.2 per cent in the June quarter.
This compares with an upwardly revised 1.5 per cent fall in the March quarter, the Australian Bureau of Statistics said today.
AMP Capital Investors chief economist Shane Oliver said the figures "suggest that house prices have bottomed out".
The biggest house price index increases were in Sydney, up by 4.9 per cent in the quarter, and Melbourne, up by 5.2 per cent.
The median market forecast was for the house price index to have risen 2.0 per cent in the June quarter and to have fallen 4.9 per cent in the year to the June quarter.
Retail figures released by the ABS today show June quarter sales rose by 2.0 per cent to $55.037 billion, in seasonally adjusted volume terms, from the March quarter.
This result was above economists' forecast of an 1.3 per cent rise.
"Healthy rebound" in housing market: economist
Dr Oliver said the price index was down 1.4 per cent from a year ago "but a 4.2 per cent rise in the quarter is a pretty strong bounce."
"It's confirming the information from the private sector surveys, which all suggest that house prices have bottomed out for now and are on their way back up again.
"You can debate how strong it is going to be but the bottom line is that with interest rates remaining incredibly low and pent up demand for housing having increased over the past 12 months, there is potential more upside here."
Dr Oliver said the rebound in house prices coincided with a slower than expected deterioration in the labour market and a more resilient economy.
"The big negative for house prices was going to be rising unemployment, but that hasn't been as big a deal as might have been thought six months ago," Dr Oliver said.
"So in the meantime, the positives of lower interest rates and the first home owners boost are having a much bigger impact than would have occurred if the economic downturn had been more severe."
Federal Government handouts and low interest rates working: economist
National Australia Bank senior economist David de Garis said the housing sector was starting to rebound following a sluggish year.
Mr de Garis said stimuli from the Federal Government and generational low interest rates were flowing through the housing market.
Last October, the Federal Government doubled the first home owners grant to $14,000 and tripled it to $21,000.
Between September 2008 and April 2009, the Reserve Bank of Australia lowered the overnight cash rate from 7.25 per cent to a 49-year low of three per cent to cushion the economy from the global financial crisis.
"It is always easy to ascribe the primary catalyst of this to the first home owners grant," Mr de Garis said.
"That was the catalyst initially, but through the middle of the year it became clear that auction clearance rates were pushing up to fairly high levels and there was core strength in the core middle market."
"The Reserve Bank has been pointing towards it, other data has been suggesting it as well and now we have confirmation from the ABS."
