However, national house price growth was being inflated by the outsized gain in Sydney, Mr Kennedy said. "The details suggest that this strength is landing in one property sector," he said. "We think that prices will moderate a little bit further as activity cools, particularly in Sydney where price growth remains very strong at levels that won't be sustainable.
Capital city house prices continue to rise, boosted by the very strong Sydney housing market. Prices rose 1. 8 per cent in the three months to June, official figures show, better than the one per cent rise expected by economists.
JP Morgan economist Tom Kennedy said it was too early to say if surging house prices might spark an interest rate rise by the Reserve Bank of Australia. "At this stage we think the RBA is pretty comfortable with the housing sector," he said. "We don't think that this is enough to get them over the line but certainly it would be something on their radar and they would be monitoring it quite closely.
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