Today the Australian Bureau of Statistics and the Commonwealth Treasury both published data the underline the case for an economic recovery in 2010 – and implicitly for interest rate increases by the Reserve Bank.

Quarterly house price data from the ABS shows a substantial 4.2% rise in the average capital city house price
during Q3/2009, or 6.2% up on Q3/2008. The quarterly increase was broad-based: Sydney (4.3%), Melbourne
(4.7%), Brisbane (4.4%) and Perth (4.5%). Only Adelaide (1.7%) turned in a modest performance in Q3, although
over the period since Q4/2007 which roughly marks the start of the Global Finance Crisis, Adelaide house prices
have risen 6.1%, the fastest of the major capital cities with the exception of Melbourne (6.3%).

The rise in house prices is a tribute to low mortgage rates and the impact of the generous subsidies to first home
owners as well as, in New South Wales, the lowest number of dwelling starts for 56 years during 2008/9.