- BIS Shrapnel expects moderate residential price growth through to 2014 - Residential property prices to benefit as economic growth picks up, lifting demand - Best gains expected in the Sydney, Perth and Brisbane markets

By Chris Shaw

According to BIS Shrapnel's 'Residential Property Prospects, 2011 to 2014' report, the Australian residential market was hit by a perfect storm in 2010/11. This included a fall in first home buyer numbers, a corresponding fall in demand from the 'upgrader' category, increases in interest rates and stalling economic conditions.

Despite the perfect storm, which saw a decline in median house prices in many capital cities in the year to March 2011, BIS Shrapnel doesn't expect a property price crash. Rather, the expectations is for steady prices through 2011 before some capital cities show moderate prices growth in the two years to 2013.

Report author Angie Zigomanis suggests while higher interest rates have been the focus of the fall in first-home buyer demand, which was down 50% in 2010, the main reason was a substantial pull-forward of buyers in 2009 due to expiring government incentives.