Australian capital city home values jumped by another 12.5% in the year to March 2010, extending the price rally that started at the beginning of the year.

The RP Data Rismark Hedonic Home Value Index also revealed that dwelling values rose by 2.9% on a seasonally adjusted basis. This growth level was consistent with the growth recorded over the past four quarters, based on the Index.

Christopher Joye, CEO of Rismark International, said the housing recovery has remained surprisingly resilient in the face of sustained interest rate hikes. "The lively capital growth observed within the major cities run against the grain of relatively anaemic housing finance flows," said Joye. "This implies that the underlying demand and supply side fundamentals are driving Australia's housing rebound, as opposed to simply credit."

Melbourne home values surged by 19% to $482,000 - the largest increase in the past 12 months. Darwin continued its upward trajectory, with median house prices climbing another 18.9% over the year to March 2010.

"Interest rates are starting to have an impact," said Tim Lawless, rpdata.com director of research. "The headline growth figure masks a changing dynamic where we have seen capital gains in the cheapest suburbs fall to almost half of what the top suburbs have recorded. Over the last year, the most expensive suburbs have recorded at least a 16.6% gain in values compared to just 7.8% across the most affordable suburbs."

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