Housing markets will retain their buoyancy for at least another year, but concerns of price bubbles loom large, according to the latest Australian Property Institute's Property Directions Survey.
Respondents believe that residential property in Sydney, Melbourne and Brisbane will remain at the top of property cycle for some time yet.
The institute's 36th report comes from a sentiment survey of national property valuers, financiers, analysts and fund managers who work at the country's largest property companies and financial institutions. This year's results were taken in September and October.
The survey responses correlate with the outlook from the developers at Stockland and Mirvac, which have been advising that while the rate of price growth will slow, pent-up demand remains strong.
Mirvac's chief executive Susan Lloyd-Hurwirtz said at the annual meeting in November that in the residential sector, conditions remain mixed nationally.
"In Sydney and Melbourne, where we have the most exposure, indicators, such as auction clearance rates, point to solid demand, supported by a competitive lending environment and increasing urban population growth. Price growth remains positive in Sydney and Melbourne, relatively steady in Brisbane and weak to steady in Perth," she said.
"We had a significant year in our residential business in the 2016 financial year, settling a record 2824 residential lots.
"This year, we are targeting an uplift in settlements of over 15 per cent on last year, aiming to settle over 3300 residential lots."
The only cloud on the sector is the supply of apartments, where experts are warning of too much construction.
The survey's respondent said that while higher density apartment developments were experiencing downward pressure, the market for established homes continued to perform well.
Australian Property Directions Survey uses the clock system, where 12am is the peak of the market and 6pm is the trough. In 2017, residential property in Sydney and Brisbane is expected to be at the top of the property cycle, at 12am, with Melbourne commencing the downswing.
Respondents believe Perth will reach the bottom of the property cycle during 2017.
Institute chief executive Mike Zissler said low interest rates were seen as the most common driver for increased demand and prices in residential property across Australia.
However, as the prices rise, even amid a low supply environment, more than half, or 58 per cent of the Sydney respondents believe residential property is in or is entering a bubble.
It was even higher in Melbourne, with 86 per cent of respondents believing residential property is in or is entering a bubble.
"In Melbourne, the two main drivers for residential property demand and prices are low interest rates, with 95 per cent of respondents seeing them as a significant to very significant driver, and foreign investment, with 91 per cent of respondents seeing it as a significant to very significant driver," he said.
"Brisbane is similar to the Sydney market, with 95 per cent of respondents seeing low interest rates as significant or very significant, and therefore the main driver of demand and prices in the city. Supply is considered the second most significant driver, with 80 per cent seeing it as significant to very significant."
