Home prices surge in January

A widely watched home value index shows prices surged in most capital cities in the first month this year.

The RP Data - Rismark Home Value Index jumped 1.2 per cent across Australia's capital cities in January.

The strong monthly gain means Australian capital city home prices are now up rather than down over the past 12 months.

RP Data's research director Tim Lawless says the January figures confirm a positive trend that has been underway for about six months.

"These strong January results are likely to have seen some upwards seasonal bias, however the housing market has been on a clear recovery trend since June last year," he noted in the report.

"Capital gains aren't likely to remain this high over the coming months, however we are likely to see the recovery trend continue through 2013." However, Mr Lawless says the strong rise in January and the upward trend in home prices mean the Reserve Bank will start thinking very carefully before implementing any further rate cuts.

"The latest housing market data adds weight to the argument that interest rates may be at the bottom of the cycle," he added.

"The Reserve Bank will be watching the performance of the housing market closely, and the positive trend in housing values will dampen calls for further interest rate cuts." Despite the positive trend, RP Data notes that average capital city home values are still 4.6 per cent below their 2010 peak.

Regional results Hobart had the biggest monthly gain of 4.5 per cent, pulling its prices to a 0.8 per cent rise over the past year.

Brisbane's prices were up 2 per cent, resulting in a 2.3 per cent gain since January 2012.

Sydney continued a steady positive run, with prices up 1.8 per cent in January, for a 3.4 per cent gain over the past year.

Perth also had a relatively solid run, with a 1.7 per cent rise last month for a 2.7 per cent gain since January 2012.

However, Melbourne has lagged again among the capital cities, with a 0.2 per cent rise in January leaving prices down 0.4 per cent over the past year.

Adelaide prices also failed to match the strong gains elsewhere, rising 0.4 per cent in January and 0.7 per cent over the past 12 months.

The two territory capitals had divergent performance: Canberra recorded a 1.5 per cent rise in January and 2.7 per cent over the past year; but Darwin prices fell 2.2 per cent last month, although were still 8.7 per cent higher over the past year.

House prices outside the state and territory capitals eased 1.1 per cent in December, and fell 0.7 per cent over 2012.

Market Data

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    0.6708-0.0076-1.12%
    AUDEUR=X
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