Economist Saul Eslake sees marked property price deceleration in 2015

House price inflation will decelerate further next year, according to economist Saul Eslake, despite of record low lending rates.

The Bank of America Merrill Lynch’s senior Australian economist says the current slowdown in house price growth will persist into 2015. 

“It is our view that national median dwelling-price growth will decelerate markedly in 2015,” he wrote, adding plans by the Australian Prudential Regulatory Authority (APRA) to toughen conditions around investor loans will also be a factor.

“The Reserve Bank of Australia for one has been extolling the role that increases in house prices have been playing in supporting both consumer spending and residential construction,” Eslake said.

“If house price growth decelerates and perhaps even declines in real terms this could weigh on consumption and dwelling investment into 2015.”