Residential property price growth in Perth and Darwin is expected to weaken over the next three years although conditions in Australia are expected to ripen for a sustained recovery in the housing sector.
Economic forecaster BIS Shrapnel says house prices could rise by as much as 22 per cent in the eastern states during the next three years, while WA's growth is expected to be much weaker.
A report by BIS Shrapnel says the conditions are ripe for a sustained recovery in residential property prices with low interest rates, solid growth in rents, and housing shortages evident in most markets.
Among the state capitals Sydney, Melbourne and Adelaide will show the strongest price growth over the next three years at 19 per cent.
More moderate growth is expected in Brisbane, Hobart and Canberra, while price growth in Perth and Darwin is expected to be weak as the local economies of these cities are impacted by a decline in investment spending in the resources sector.
Among other cities around Australia, Newcastle is expected to benefit from the migration of residents from Sydney over the coming years with the median house price expected to soar 22 per cent.