Sydney to jump up 15-20%, ACT to fall

With the Sydney market heating up, one analyst has come out and said that he expects house prices to skyrocket by 15% to 20% over 2014.

SQM Research's Louis Christopher predicted a significant price increase for Sydney over next year on the back of low interest rates and an improvement in sentiment towards the national economy.

In the 3rd annual Housing Boom and Bust report, Christopher said that this also took into account an interest rate rise expected around mid- to late-2014.

"The housing recovery that commenced in the third quarter of 2012 for most capital cities is now about to enter into a more accelerated phase from what has generally been modest price rises to date," said Christopher.

The results, however, will vary significantly among the capital cities. Canberra is expecting a house price drop of between 1% to 4%. 

Melbourne will be in-line with the average range, when Sydney is excluded, of 4% to 7%. "Sydney though is turning into a beast unto itself. We have a strong conviction that the ABS will record 15% to 20% house price rises next year for that city. Such a rise will create a large dilemma for the RBA, especially if the national economy is still running below average growth," he said.