Australian housing market cooling: report

Australian housing prices are not expected to rise as much as previously predicted, according to a National Australia Bank (NAB) report released on Wednesday.

The residential property index fourth quarter report also found foreign investment in houses and apartments has also cooled, with activity down in all states except Victoria.

In that state, foreign purchasers account for one in three property sales, according to the NAB report.

The report stated around 70 percent of foreign purchases are for properties worth less than 820,000 U.S. dollars, while properties worth more than 4.1 million U.S. dollars account for 5 percent of sales.

Survey questions conducted for the report found around 53 percent of all foreign purchases were for apartments, 31 percent for houses and 16 percent for house and land re-developments.

NAB senior economist Alan Oster said factors for the predicted cooling of the market included rising unemployment, sluggish household income growth, low affordability of houses, rising inflation and high existing levels of debt.

"We are forecasting average house price growth of around 4 percent over the year to end-2015, and 2 percent over the year to end-2016," Oster said.

Figures vary from state to state. The most expensive Australian city is Sydney, where average housing prices leapt 30 percent in 2013/2014.

But a BIS Shrapnel report released at the end of last year predicted Sydney prices would only grow 7 percent in 2015/2016. Endi