Australian interest rates likely to hold
Interest rate hikes in Australia have caught up with the property market and price inflation slowed across the country toward the end of 2006. However, Perth experienced higher growth than most and economists are forecasting that the cost of borrowing has reached its peak for the year.
The Australian Bureau of Statistics' house price index showed that countrywide the market had underperformed in the fourth quarter of last year. Analysts had predicted a rise of 1.5% but the actual figure was a more modest 0.9%.
Perth however, still showed evidence of a stronger market than the rest of the country with 1.7% growth for the final quarter and 36.9% higher than December 2005.
Spiros Papadopoulos, senior economist at National Australia Bank, said: "The modest growth in national house prices, and negative growth in Sydney [where prices fell 0.1%], combined with many reports that rents are rising rapidly as vacancy rates fall in capital cities, is a further factor to support interest rates on hold."
Mr Papadopoulos said he expected consumption growth to be around 3% for this year and 2008.
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