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CANBERRA, AAP – Treasurer Josh Frydenberg says the rise in house prices is a positive sign for the Australian economy.

Analysts expect a 15 per cent gain in prices in 2021, a step up from earlier predictions.

The Reserve Bank is closely monitoring the market, in particular trends in borrowing and lending standards.

“It’s positive that the price of houses has been going up,” Mr Frydenberg said on Friday during a visit to Perth.

“It means people are feeling more comfortable in the value of their home, that’s going to give them greater confidence to spend, that spending will generate economic activity and that is good news for the economy.”

Elliot Clarke from Westpac said the bank’s February forecast for a 10 per cent gain in prices in 2021 would be achieved by June.

“While a moderation is likely, as was outlined this week, a sudden loss of momentum near term seems unlikely.

“As a result, Westpac now expects a 15 per cent gain in 2021.”

However, Westpac expects housing price growth to moderate to around five per cent next year.

Capital Economics’ Marcel Thieliant described the current housing market as “red hot” and expects rent inflation to have risen one per cent quarter on quarter when the latest figures are released next week.

Mr Frydenberg, who will deliver the latest budget on May 11, said the economy was “bouncing back strongly”, however Australians needed to be realistic about the ongoing challenges of the pandemic.