SYDNEY, Jan 2 (Reuters) - Australian home prices ended 2019 with the biggest quarterly rise in a decade, a remarkable return to boom from bust that promises to support consumer wealth and, perhaps, spending.
Data from property consultant CoreLogic out on Thursday showed home prices across the nation rose 1.1% in December, from November when they climbed 1.7%.
That brought the gains for the three months to December to 4.0%, the steepest rise since late 2009 and a world away from the punishing declines seen earlier in the year.
The resurgence was again led by the major cities with values in Sydney up by 1.7% in December and 6.2% for the quarter. Melbourne likewise boasted gains of 1.4% and 6.1% respectively.
The median Sydney home was now worth A$840,072, compared to the national value of $537,506.
It was the sixth straight month of price gains and a decisive end to a two-year price slump that had chipped away at consumer wealth and confidence.
Household wealth had already rebounded to a record-high A$10.9 trillion ($7.64 trillion) by the end of the September quarter. A further sharp increase was certain for the December quarter given the housing stock alone was worth A$6.9 trillion.
The sector has been the clearest winner from the Reserve Bank of Australia’s (RBA) decision to cut interest rates three times since June to an historic low of 0.75%.
“A recovery in housing values implies home owners are becoming wealthier, which may also help to support household spending,” said CoreLogic’s head of research Tim Lawless.
“However, the flip side is that housing affordability is set to deteriorate even further as dwelling values outpace growth in household incomes, signalling a set-back for those saving for a deposit.”
So far, consumers have been reluctant to draw on their new-found riches with retail spending growing at recession-like levels as wages and confidence lag.
The national mood has also been darkened by massive bushfires sweeping the states of Victoria and New South Wales, blanketing Sydney with smoke and squeezing the tourist trade at the peak of the summer season.
$1 = 1.4263 Australian dollars Reporting by Wayne Cole; editing by Richard Pullin