House prices across Australian capital cities are tipped to ease after posting their slowest gains in three years during 2015.
Prices ended the year flat in December, with falls in Sydney, Canberra and Adelaide offsetting gains in the nation's remaining five capitals, CoreLogic RP Data's latest home value index shows.
Overall growth for 2015 was a touch below the previous year with prices rising 7.8 per cent to a median of $595,000 - the slowest pace since 2013 when prices rose nearly 10 per cent.
Sydney remains Australia's most expensive city, with prices climbing 11.5 per cent to a median of $800,000 - more than double what a property will cost you in Hobart.
Prices in Perth and Darwin went backwards during the year, while Melbourne and Brisbane pushed higher.
CoreLogic RP Data head of research Tim Lawless says with the softening of the housing market boom in the final months of 2015, "more sedate" conditions were expected in early 2016.
"Throughout 2016 we may see further moderate declines in Sydney and Melbourne, however considering population growth has remained strong in these areas and economic conditions are very healthy in these cities, we would be surprised if dwelling values fell materially before conditions start to level," he said.
Mr Lawless tipped Brisbane to be a star performer in 2016, with rental yields much higher than Sydney and Melbourne and prices much more affordable.
Darwin and Perth are expected to again underperform amid ongoing economic uncertainty, but Mr Lawless expects the rate of price falls to ease.
Economists believe that while mortgage rates remain low, home price growth will be sluggish in 2016 because of tighter lending standards and lower auction clearance rates.
"While prices will, as always, vary from city to city, income constraints and regulatory changes seem likely to put the brakes on dwelling prices," St George chief economist Hans Kunnen said.
"They may even shift them into a modest reversal during 2016."
CommSec's chief economist Craig James noted that total returns on Australian homes rose 11.8 per cent in 2015, well ahead of other investments such as local shares and bonds.
However he expects returns on property to wind back to seven per cent this year, dampened by a record amount of homes being built and a slowdown in population growth.
SYDNEY PROPERTY MARKET SHINES IN 2015
- Sydney: up 11.5pct to $800,000
- Melbourne: up 11.2pct to $610,000
- Brisbane: up 4.1pct to $475,000
- Adelaide: down 0.1pct to $420,000
- Perth: down 3.7pct to $510,000
- Hobart: down 0.7pct to $350,000
- Darwin: down 3.6pct to $520,000
- Canberra: up 4.1pct to $585,000
- Combined capitals: up 7.8pct to $595,000
MONTHLY HOME PRICE GROWTH FLAT IN DECEMBER
- Sydney: down 1.2pct
- Melbourne: up 1.0pct
- Brisbane: up 0.9pct
- Adelaide: down 1.5pct
- Perth: up 2.3pct
- Hobart: up 0.8pct
- Darwin: flat
- Canberra: down 1.1pct
- Combined capitals: flat