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Australia's property market surged ahead in the first few weeks of 2013, with home prices up more than one per cent since the start of January.

The RP Data-Rismark daily home value index for Australia's five largest capital cities was up 1.3 per cent on Tuesday, compared to January 1, and up 1.7 per cent compared to a year ago.

CommSec chief economist Craig James said the index showed house prices were at their highest point since November 2011.

Mr James said the figures showed recent interest rate cuts and signs of improvement in the global economy had provided a boost for the housing market.

The Reserve Bank of Australia cut the cash rate a quarter of a percentage point to three per cent in December and has delivered 1.75 percentage points in cuts since November 2011.

"The rate cut delivered in December certainly seems to be adding momentum to buying activity and thus prices," Mr James said.

"In addition, the more settled conditions on overseas financial markets and the gains on the domestic and global sharemarket have provided confidence to budding home buyers."

But he warned the resurgence of the housing market, following a weak couple of years, may put further interest rate cuts off the table.

"If demand for homes continues to lift over January, pushing up prices, the Reserve Bank will shelve any plans to cut rates," he said.

"In fact the improvement in global financial markets over the past few weeks already points to the Reserve Bank leaving rate settings steady."

Perth has been the strongest performer so far, with prices up 2.4 per cent this year and up more than three per cent compared to January 2012.

Sydney has also seen strong price growth, with the average price rising 1.7 per cent since January 1 and almost 3.5 per cent compared to last year.

However, Melbourne's housing market started the year comparatively weak; home prices are up 0.4 per cent so far this month but are still 0.6 per cent lower than a year ago.

Published on: Wednesday, March 06, 2013

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