National city home prices rose in the country by 0.3 percent after a 0.1 percent rise but growth is expected to slow down when the Reserve Bank's rate hike in November affects the market says property information provider RPData-Rismark.

The Reserve Bank of Australia changed cash rate to 4.75 percent in November from the previous 4.5 percent. "Since the market started to cool in June the cumulative decline in dwelling values to the end of October has been less than 1 percent across the capitals, suggesting a market that is slowing at a controlled pace." RP Data research director, Tim Lawless, said in a statement. "Of course, the October data doesn't include any effect from the November interest rate rise, which we expect will have caused conditions to cool further."

During the first 10 months of 2010, Australian capital city dwelling values increased by 4.3 percent which is broadly in line with disposable income growth. On the other hand, capital gains in the twelve months to end October have been 6.5 percent on the strength of double-digit annualized growth reported in 2009 and 2010.

Rismark International joint managing director, Ben Skilbeck, said: "The market dynamics are unfolding as we projected with a stable soft-landing in the second half of 2010 in which Australian dwelling values have remained mostly unchanged. Going forward, we are forecasting some weakness as the market absorbs the near-double rate hike effected in November."

"Since the RBA is unlikely to lift rates in December, the key swing variable will be the extent to which rates increase further in 2011. Rismark's analysis has shown that aggressive rate hikes can put downward pressure on prices. Through the cycle, however, homes values tend to rise in line with disposable incomes. This is good news as the RBA is projecting very strong household income growth in the years ahead," he continued.