By James Glynn

SYDNEY--Australian house price continued to rise strongly in December supported by record-low mortgage interest rates and a strong recovery in the broader economy from the pandemic-led slump that marked the first half of 2020.

CoreLogic Inc.'s national home value index rose by another 1.0% in December from November, the third consecutive month-on-month rise following a 2.1% drop in dwelling values between April and September.

Home values finished the year 3.0% higher with regional housing values rising by 6.9%, a rate that was more than three times higher than the combined capitals, where home values were up 2.0% over the year, the property research group said.

CoreLogic's research director, Tim Lawless, said the number of residential property sales plummeted by 40% through March and April but finished the year with almost 8% more sales relative to a year ago as buyer numbers surged through the second half of the year.

"In retrospect, the rebound in housing market activity and dwelling values is unsurprising given the rapid and substantial monetary and fiscal response from the government and policy makers," Mr. Lawless said.

The economy has been supported by a wave of government spending, with the job market showing strong signs of a rebound through the latter half of 2020 and GDP growth rising in the third quarter, lifting the country out of recession.

Still, economists warn that the steady withdrawal of government payments this year could temper house price growth. Australia has also been successful in limiting the spread of the Covid-19 virus, but the Christmas holiday period has seen renewed outbreaks in major capitals, forcing renewed border closures between states.

The pandemic has also seen people take up remote working opportunities fueling demand for housing in regional areas, CoreLogic said.

"Regional housing markets had generally underperformed relative to the capital city regions over the past decade, but 2020 saw regional housing values surge as demand outweighed supply," said Mr. Lawless.

Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

01-03-21 1815ET