Confidence in the property market has been dented with key players expecting growth to grind even slower in 2016.
Dwelling construction and house price growth is tipped to be much slower in the coming year, according to the latest ANZ/Property Council Survey.
"The housing sector, which plays an important role in shaping the Australian economic cycle, will likely be less stimulatory for growth in 2016 than in 2015," ANZ's co-head of Australian economics Cherelle Murphy said.
"There will not be a significant downturn, but a more muted profile for housing construction and prices this year."
The national survey of investors, developers and contractors in the property market shows while the outlook is gloomy for the housing market, prospects for commercial property appear positive.
There's also a solid pipeline of work for property businesses in the year ahead.
And there's still strong appetite from overseas investors despite weaker housing sales activity.
But this may be dampened by stricter foreign investor policy enforcement from the government and turbulence on China's financial markets, the survey found.
Confidence has cooled in Australia's largest market, New South Wales, where indications of the forward work schedule have also become more subdued, Ms Murphy said.
"Most other states and territories are steadier though, with evidence of a continued improvement in confidence in Victoria and Queensland," she said.
The exceptions are Western Australia, where conditions continue to deteriorate, and Tasmania, which has shown a decent pick-up from a low base in recent quarters.
Ms Murphy said tighter controls for investor lending and higher mortgage rates from the banks were tempering the market.
"Today's survey data suggests that the property industry is bracing for higher interest rates and more prudent credit distribution by lenders," Ms Murphy said.
"We expect, however, that the Reserve Bank may provide some relief for the economy this year, through interest rate cuts, if other sectors do not pick up to compensate for the slower path of housing."