Industry executives predict that any hike in property prices will be more restrained as two property increases for 2011 are expected.

RP Data national research director Tim Lawless told the Herald Sun that the Reserve Bank's rate rises since October 2009 have combined with a wind-down in the market cycle in recent months.

"For 2011, we are likely to see vendor expectations change as slower market conditions come into play," he says. "Houses will take longer to sell and buyers will be negotiating much harder than they were in 2009."

In October, it took an average of 49 days to sell a house compared to 38 days during the same period last year. This has led to more people opting to rent and rental rates possibly rising with the increased demand.

"Over 2011 it is likely that rental growth will at least move back to the historic average of between 6 percent and 8 percent year on the year, “ he added.

Andrew Wilson, Australia Property Monitors senior economist forecasts that activity will be subdued in most markets although strong demand and price growth is expected by mid-year.

"Property prices are anticipated to rise nationally for the year by a modest 3 percent, with Sydney and Perth expected to record the strongest performances," he says. "Investors will emerge in the marketplace once the floor of the current price cycle becomes apparent, recognising the potential for high relative yields and capital growth."
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