The RBA has, as expected, kept interest rates on hold for another month, and the month of June has seen the property market bounce back from its slight drop in May.
After dipping 1.9 per cent in May, housing prices in Australia rose 1.4 per cent in June according to figures from RP Data.
There were concerns the drops in May were the beginning of a necessary correction of the housing market after steep increases in recent years.
Housing prices in Australia were 10.1 per cent higher in June than at the same time last year, and auction clearance rates remained steady at 60 per cent.
In keeping rates low, the RBA is counting on a stimulated new home market to help keep the economy ticking over as the mining industry slows.
Off the back of the housing price decreases in May the RBA played down fears of a bubble in the market, but did say investors might have to get used to single-figure price rises in the foreseeable future.
RP Data research director Tim Lawless told Reuters that house price increases were trending at a more sustainable level.
“With interest rates remaining low for the foreseeable future, it is doubtful that housing values will start to slide, at least not at a macro level,” he said.
“What is more likely is that natural affordability constraints will start to dent buyer demand, as will the low rental yield scenarios that are very much evident across Melbourne and Sydney.”
