Property market forecast to ease by 2017

(AAP) Source: AAP

Australia's house prices are expected to begin declining in 2017, economic forecaster BIS Shrapnel says.

Australia's hot property market is expected to come off the boil by 2017.

Economic forecaster BIS Shrapnel says low interest rates will fuel further house price growth in under supplied residential markets, particularly Sydney and Melbourne in the 2016 financial year.

But come 2017, prices are expected to steadily weaken in a number of cities due to a lack of affordability and a rise in interest rates, it says.

The downturn is not expected to be dramatic but similar to what was experienced during 2011-2012.

BIS Shrapnel senior manager Angie Zigomanis says most concerning is the explosion in apartment construction.

"Moreover, the boom in apartment construction over the past couple of years is creating a disconnect in the supply balance between detached houses and units, with a resulting difference in their price outlook," Mr Zigomanis said.

"Most capital cities are building apartments at record rates, driven by investor demand."

He said strong tenant demand would be needed to support rents and the value of apartments.

"However, we are seeing population growth nationally begin to slow," he said.

Net overseas migration has fallen from a recent peak of 235,700 people in 2012/13 to about 184,000 during the 2014 calendar year.

The slowdown in migrants is most evident in the mining boom states of Western Australia, Queensland and the Northern Territory.

Source AAP

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