Australian property market to hold steady for 2011

Home prices are expected to remain flat this year amid signs the slowdown in price gains could become entrenched, says the ANZ Bank.

It estimates house prices will plateau this year, at just over $550,000 on average, as contending forces of rising interest rates and a strong demand for employees work themselves out in the market.

"Further price weakness is expected over 2011 as the prospect of additional rate rises weigh on both affordability and investor sentiment," said an ANZ senior real estate economist, Ange Montalti.

"While the market is vulnerable to weaker momentum becoming more entrenched, good support from healthy economic growth and a further tightening in rental markets should begin to shift perceptions over 2011-12."