The Consumer Price Index for the housing group rose by 0.6 percent, compared to the all groups increase of 0.4 percent during the December quarter.

Contributing to the annual increase of 2 percent for the housing group, were substantial increases in the price of utilities – 12.5 percent for electricity, 12.8 percent for water and sewerage, 7.1 percent for gas and other household fuels and 6.2 percent for property rates and charges.

Rents increased by 4.2 percent in 2010, on a weighted average eight capital city basis and the cost of house purchase increased 2.9 percent. President of the Real Estate Institute of Australia, David Airey said, “The RBA consumer price measures of weighted median and trimmed mean are 2.3 percent and 2.2 percent respectively for the year – well within their target zone of 2.3 percent.”

“The inflation genie is under control, with a slow-down in 2008 of the annual rate on the two RBA measures – they were 4.8 and 4.7 percent”, he continued. “REIA’s Deposit Power Housing Affordability Report has shown a dramatic worsening in housing affordability with, on average, 35 percent of household income going towards loan repayments.”

“Increasing rates next week will only cause greater mortgage stress for home owners and will further flatten demand in the property sector”, he added.

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