Oz house prices drop amid high borrowing costs

An index of the weighted average price for established houses in the capital cities fell 0.3% in the June quarter, the Australian Bureau of Statistics said in a report. Prices rose a revised 0.4% in the March quarter.

The figures add weight to comments by Reserve Bank of Australia Governor Glenn Stevens on July 16 that more-expensive credit will slow the economy enough to control inflation. The RBA will probably keep its cash target rate at a 12-year high of 7.25% at its review of monetary policy tomorrow, economists say.

House prices in Perth and Hobart led the decline in the second quarter, according to the statistics bureau, falling 2.4% and 2% respectively. Prices in Sydney, Australia's most-populous city, rose 0.3% and prices in Melbourne fell 0.3%.

The house prices report comes after figures last week showed home-building consents fell for a second month in June. Total dwelling permits fell a seasonally adjusted 0.7% in June, following a revised 7.2% tumble in May, the statistics bureau said.

By Jonathan Underhill

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