Australia could be on the cusp of a second housing bubble, with the strongest resurgence in property prices for two years.
Each of the capital cities rebounded in value in the past three months, edging steadily higher on the previous quarter.
Brisbane prices rose 2.3 per cent to be almost 3 per cent higher over the year.
The strongest rises were recorded in Perth and Darwin, but economists considered both cites were already coming off lower prices.
Sydney was the surprise, with prices in the city already considered the most overpriced and expensive rising 1 per cent.
The Australian Bureau of Statistics found the leap still left Sydney values nearly 4 per cent lower than this time last year.
Melbourne rose 2.3 per cent in the December quarter.
The cost of a house in Adelaide increased 1.1 per cent and Hobart gained a further 1.8 per cent.
The results surprised some economists with the strength, particularly after a 1 per cent fall during the September quarter.
The figures will interest the Reserve Bank, which has said it does not want to see another housing boom.
Median values
· Sydney $518,000
· Canberra $409,500
· Perth $363,000
· Melbourne $348,500
· Darwin $344,000
· Brisbane $332,000
· Adelaide $303,000
Source: Australian Property Monitors
The housing bubble two years ago was blamed for making consumers too confident and sparking a massive spending spree across the economy.
CommSec equities economist Andrew Mitchell said the RBA was unlikely to react to one rise in house prices.
It would instead monitor the numbers, he said, for a sustained increase in national property values.
The result could be a return to some spending by households.
“Retail spending was particularly week in 2005,” Mr Mitchell said.
“The principal reason why consumers sewed up their wallets was house prices.
“Previously, consumers were happy to spend up big, knowing their wealth was rising with the value of their house.”
“Previously, consumers were happy to spend up big, knowing their wealth was rising with the value of their house.”
The RBA has been credited with bringing the housing boil back to a simmer with a staggered series of interest rate rises. It last adjusted rates upwards, in March last year to the current figure of 5.5 per cent.
The bank has warned this week, though, that another rate rise is imminent, particularly if inflation rises past 3 per cent.
It is now 2.8 per cent.
TD Securities chief strategist Stephen Koukoulas said auction clearance rates and competitive rents were contributing to the price rise.
“The rental market is very tight, with rents looking set to jump as a shortage of property emerges.” Mr Koukoulas said.
The price spike came as Reserve Bank assistant governor Malcolm Edey said the Australian economy was travelling well as it continued to expand.
Mr Edey said households, at the moment, were starting to claw back their spending but remained keen to take on new credit.
The growth has slowed from 20 per cent to 12 per cent a year, but Mr Edey said that figure remained high.
Australians owe about $34 billion on credit cards, with an average balance of $2600 on each account.
“It means that households are still increasing their debt levels.” Mr Edey said. “But they are doing so at a slower pace than they were a couple of years ago.”
