Citi forecasts of 3% rise in house prices and then slight correction from March 2014 “reasonable”: RP Data's Tim Lawless

Citi Research modelling that forecasts house prices to rise 3% between now and March next year before a "slight" 2% correction thereafter are "broadly" in line with the views of RP Data.

Citi Research analysts Paul Brennan and Josh Williamson expects a slight drop in house prices from the second quarter of 2014 to be driven by the “powerful effect” of lower Chinese immigration, a weaker Chinese economy and a lower Australian dollar. 

RP Data expects a similar trajectory for dwelling values, but driven by wages growth over the medium term. 

“The direction of labour markets, particularly the level of jobs creation and unemployment will have a direct bearing on the level of value appreciation across the Australian housing market as will consumer confidence,” says RP Data national research director Tim Lawless. 

“We are likely to report a fairly flat June quarter when our hedonic indices are released on Monday next week after a solid rise in values over the month of June retraces the 1.7% decline we saw in the index reading over the months of April and May. 

“Perth and Sydney are certainly the stand out performers currently, however Brisbane is also a market that is likely to see some improvement in market conditions which have been relatively sedate up to now,” he says.