Australian central bank hails housing outlook as rates rise

The Reserve Bank of Australia has increased its base rate again, stating that the country is seeing a solid recovery in both its economy and property sector.

Speaking after the move to increase the cash rate by 0.25 per cent to 3.75 per cent, governor of the bank Glenn Stevens said that this decision was taken because the economy is normalising, needs less stimulus and faces higher inflation than previously expected.

Commenting on housing, he suggested the credit crunch is easing, remarking: "Credit for housing is expanding at a solid pace and dwelling prices have risen significantly this year."

Although the increase in the rate may make mortgages in Australia more expensive, house prices in the country have been rising, a situation that could continue strongly over the next couple of years as the wider economy continues to bounce back.

Earlier this week, figures from the RP Data Rismark Survey showed that the average home in the country saw its price jump by 1.4 per cent in October, meaning the rise in home values in Australia passed ten per cent over the course of the year so far, with two months of 2009 still to come.