Residential property prices in Australia increased 3.7 per cent in September to a six year high, heightening the likelihood of a third consecutive rate hike in December.
The latest figures from Australian Property Monitors (APM) showed that Melbourne is the fastest growing real estate sector with prices rising 6.1 per cent in the third quarter of the year, the fastest quarterly increase since 2003.
The average house price in Melbourne was $487,249, compared with $437,560 in September last year; the city's average house price has now risen 11.4 per cent during the last 12 months.
Hobart is not far behind Melbourne, with prices up 5.4 per cent for the quarter.
APM economist Matthew Bell has warned that the recent jump in property prices may not be sustainable over the longer term because they are currently being underpinned by first home buyers.
According to Mr Bell, the rise in house prices across the nation is being led by the explosive growth in the more expensive suburbs which have seen house prices steadily climb since June.
“House price growth in Australia has come despite massive falls in many developed economies due to the global economic crisis. Low interest rates, generous government grants for new home buyers, relatively low unemployment, and strong population growth have all helped to lift demand for houses,” he said.