The steep rise recently seen in the prices of Australian homes for the July-September period for the current year, is likely to result in a surge in interest rates as well. Over the coming moths, economists and analysts are expecting more rise in house prices, and a corresponding rise in interest rates.

According to the Australian Bureau of Statistics, the average rise in prices of homes in eight major Australian cities has been as much as 4.2% in the third quarter. This has been much better than the estimate made by analysts polled by Dow Jones who pegged the rise at 2.75%.

According to reports, the Reserve Bank of Australia's board of policy makers will be reviewing the current interest rates with regards to the new house prices and probably revise the same. In a meeting which is scheduled for tomorrow, the RBA is expected to raise the interest rates by at least 3.5%.

"News of another hefty increase in house price in the September quarter will certainly not dissuade the RBA from raising rates tomorrow", said Chris Caton, chief economist at BT Financial Group. Analysts, aspiring house owners and economists are now waiting for the RBA's decision post tomorrow's meeting.