According to a report from the Australian Property Monitors, Australian house prices were up +16.2% in the first quarter, compared to the same quarter of 2009, at A$542,827, which is the fastest pace in six years.

Prices for units were +10.2% higher for the same period.

The Reserve Bank of Australia (RBA) recently increased its interest rate from the sixth time in eight months and it is now 4.5%. The decision reflects the confidence that Australian policymakers appear to have in the strength of the country’s economic recovery.

Matthew Bell, economist at Australian Property Monitors, said there were signs higher rates were beginning to have a cooling effect. The pace of growth in house prices did moderate in the first quarter to be 3.1%, up on the fourth quarter of last year.

Median house prices in Sydney were +14.7% higher for the year at $609,353 while Melbourne recorded the highest growth of +27% among major cities. Bell said the latest Government measures to curb foreign investments may help take some of the heat off the market.

Under the new Government plans, temporary residents will have to notify the authorities for screening and approvals when buying houses in Australia. Penalties and systems to monitor any illegal activities were also introduced.