Australian prices 'to go on rising'

The recent interest rate rise in Australia will not stop a rise in house prices, it has been argued.

In an article on the issue, the Australian newspaper noted that a recent survey of consumer sentiment saw 74 per cent of people expecting values to increase, up from 53 per cent in May.

The publication suggested that the RP Data-Rismark capital city home price index figure for August of a 1.9 per cent jump is unlikely to be sustained, but argued that there are underlying factors that will be decisive in raising the cost of housing over the long term.

Growth in gross domestic product, a rapid population increase and a lack of new homes being built will all contribute to this, it argued.

Australia's cash rate was increased from three per cent to 3.25 per cent earlier this month.

However, this is still low compared to recent history, with the figure being as high as 7.25 per cent before September 2008.

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