While house prices are rising primarily because of a significant imbalance between supply and demand, some economists also argue that the economy is more robust than it otherwise looks, helped by rising asset prices. Last month, the RBA adopted a more hawkish policy stance, warning that interest rates may not have peaked just yet. "Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices," Lawless added. AMP expects home prices to rise around 5% this year as the supply shortfall continues to dominate. Still, "the possibility of rate hikes along with the rising trend in unemployment pose a key downside risk," Oliver said.

Source: Wall Street Journal June 03, 2024 00:24 UTC