Brakes go on Australian house prices

The weighted average Australian house price index for established houses in eight capital cities rose 2.5 per cent in the first quarter, the Australian Bureau of Statistics said yesterday.

That compares with a 6 per cent rise in the fourth quarter and is the smallest gain since the March quarter of 2001.

"How this sector fares over the rest of this year will determine the fate of the overall economy," said Su-Lin Ong, senior economist at RBC Capital Markets.

"The sands are shifting. Driven by a moderation in the key housing sector, where virtually all indicators are pointing down, the economy appears to have lost considerable momentum," she said.

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