Australian consumer, business confidence rises as economy looks up

According to economists, the Australian housing sector has bounced back on strong demand for housing and a slower than expected rise in unemployment rate.

The Australian Bureau of Statistics (ABS) reported a rise in its house price index by 4.2 per cent in the June quarter, which was well above market expectation at two per cent increase.

The index measures house prices in Australia's eight capital cities. The index had fallen over the previous four quarters.

Analysts say the ABS report comes as a confirmation of private sector surveys that point to a rising trend in prices after a bottoming out over the last four quarters.

They say there may be some difference of opinion about the vigour of the recovery but the bottom line is that low interest rates coupled with pent-up demand for housing prospects for recovery remain high.

The housing sector has also been boosted with positives of lower interest rates and the demand from first home owners they add.

Figures for unemployment rate for July are due on Thursday. The year has seen the rate rise from a 33-year low of 3.9 per cent in February 2008 to 5.8 per cent in June.