Economists expect house prices will reclaim their record highs in 2020, as further interest rate cuts by the Reserve Bank of Australia fuel a surge in the residential property market, which has previously been a target of speculators.

“Although the RBA is no doubt surprised by the second half of 2019 house prices response to initial rate cuts, they would also acknowledge that this merely reaffirms that interest rates still have power in eliciting a demand response,” said Yarra Capital Management’s head of macro and strategy, Tim Toohey.

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