House prices in Perth are expected to rise sharply over the next three years, faster than any other capital city in Australia, experts had predicted.

According to BIS Shrapnel, the house prices in Perth would jump by 22 percent by mid-2013, buoyed by fresh round of resource projects in the city.

But this forecast was completely debunked by Alan Bourke, president of the WA Real Estate Institute who said that the housing market in Perth is actually oversupplied so house prices would dip, rather than rise.

"We're a good 10 to fifteen percent oversupplied so that doesn't show great evidence for price escalation, indeed in the short term we would see perhaps going sideways in the market place or maybe even a softening to five per cent.

"I don't want to predict a number but it's certainly not going to be as high as 22 percent over three years, we're saying it'll be a very steady, constant movement," Bourke said in a statement.

At the same time, BIS Shrapnel said future interest rate increases to be announced by the central bank would prevent the growth of house prices compared with the level experience in the last upturn in Western Australia.

Sue Ash, chief executive of WA Council of Social Service said that the growth forecast in the housing market in Perth should translate to an increase in WA's public housing stock. She said that with more people finding employment in the city, that would mean more people looking for houses or other accommodations.

Ash echoed sentiments that the infrastructure programme in the city has not kept pace with the population growth.