House prices surge despite interest rate rise

Extract from article by STUART FAGG on  ninemsn Money 31/03/10

The RP Data/Rismark Hedonic Home Value Index found that after a 2 percent price increase in January, prices rose by a further 1.4 percent in February.

In the 12 months to February, Australian capital city dwelling values rose by 12.7 percent, pushing the average Australian dwelling price up to $455,0000, RP Data said.

The average house has increased in value by $5,000 every month in the past year.

Prices are continuing to rise on the back of demand from a growing population outstripping housing supply.

"The housing market has been undeniably buoyed by population growth of 2.1 per cent per annum, which is among the strongest in the developed world," said Rismark CEO, Christopher Joyce.

The Housing Industry Association recently warned that Australia must build an additional 500,000 houses by 2020 or face a crippling rise in house prices that will make home ownership out of reach for many.