SYDNEY (REUTERS) - More Australians expect home prices to rise in the year ahead than at any time since mid-2010, a survey showed on Friday, further evidence that low mortgage rates are working to revive the housing market.
The survey by Westpac and the Melbourne Institute also showed far fewer consumers now feared there would be a drop in prices, lessening one potential impediment to demand.
The survey's index of house price expectations jumped to 53.9 percent in April, from 26.7 percent in January. The index measures respondents anticipating rising prices minus those expecting a fall.
That was the highest reading since July 2010 and reflected in part the Reserve Bank of Australia's (RBA) efforts to stimulate the market with rate cuts in October and December.
"The sharp upgrade in house price expectations is evidence that Australia's housing recovery is consolidating," said Matthew Hassan, a senior economist at Westpac.
"It implies that buyers will be less inclined to hold off in anticipation of lower prices and sellers will be less inclined to accept 'lowball' price offers."
The survey found 62 percent of respondents expected home prices to rise over the next 12 months, while 30 percent looked for a steady outcome and 8 percent for falls. The latter was the lowest since April 2010.
A moderate rise in home prices in recent months, combined with gains in equities, have also helped rebuild household wealth and underpinned a hefty increase in retail sales this year.
That is one reason the central bank has held rates steady at 3 percent at its past three policy meetings, though it stands ready to ease further if needed.
There were also signs of a pick up in mortgage demand in a report from property consultant RP Data on Friday.
Its index of mortgage activity climbed a seasonally adjusted 6.2 percent in March, from February, to reach 91.1. The index covers around 90 percent of the residential mortgage market and has a close correlation with official figures on housing finance.
"The strong result comes at a time when we are also seeing a sustained lift in many other housing market measures including a recovery in dwelling values, higher auction clearance rates and less discounting from vendors," RP Data said in a note.