Australian house prices are rising in every major city

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Australia's property revival is spreading across the country with prices now rising in every major city.

Sydney and Melbourne continue to lead the rebound, with prices climbing 1.1% and 1.2%, respectively, in January, according to CoreLogic Inc. data released Monday. Even Perth, where a 5.5-year downturn has hammered property values, is seeing positive movement, with prices up 0.1% in the month, and 0.4% in the past quarter.

All up, prices across the eight state and territory capitals rose 0.9% in January, CoreLogic said.

While the pace of increases slowed slightly from previous months, even at this rate property values in Melbourne could be back at a record as soon as this month, with Sydney not far behind.

Even so, "this pace is still unsustainable considering household income growth is sluggish and housing affordability challenges are worsening," said Tim Lawless, head of research at CoreLogic.

As well as interest rate cuts and a loosening of lending criteria, price increases are being driven by a shortage of houses for sale. January — the height of Australia's summer holiday season — is traditionally the quietest month of the year, so a key test will be what happens if more properties come onto the market.

"The knock-on effect could dampen the sense of urgency to purchase housing, and could mitigate more rapid growth," Lawless said.

Bloomberg News