NAB Group Economics has lifted its national house price forecasts for 2017 to 3.4% (previously 0.4%). Unit price forecasts were also revised up, to 0.8% for 2017 (was -1.6%).
NAB Group chief economist Alan Oster said, "Solid market sentiment in the NAB Survey and a surprisingly strong price response to lower interest rates in 2016 has prompted us to revise up our 2017 forecasts, given NAB's expectation for more rate cuts this year.
"However, we still expect the housing market to cool noticeably in 2017, especially for apartments" said Oster.
'Considerable uncertainty' still hangs over the outlook for dwelling prices, the survey said while supply concerns and affordability is are still major issues in the best performing markets.
Considering all of these factors, conditions are expected to soften going forward, contributing to more moderate price growth in the major property markets this year.
"Importantly though, we continue to hold the view that residential property prices are unlikely to experience a severe 'correction' without a trigger from a shock that leaves unemployment and/or interest rates sharply higher - a scenario not included in our forecasts" said Oster.