Market set to bounce back

Australia's residential property market will be well into an upswing in prices and activity by next year, according to a new survey of prominent industry players.

The Australian Property Institute has polled analysts, valuers, financiers and fund managers, with the survey finding Sydney is already in the midst of a market upswing and Brisbane is starting to recover.

The Melbourne market, while still in the doldrums, is believed to have reached the bottom of a down cycle that began more than two years ago.

"Over the next two years, residential property in all three cities is expected to move further along the upswing, with Sydney the most advanced," API said. The group cites declining interest rates and incentives targeted at increasing construction and the supply of new homes as influential factors driving demand and "propping up" the market.

Over the past year, dwelling values rose 3.7 per cent in Sydney, 1.6 per cent in Melbourne and 2 per cent in Brisbane, according to RP Data-Rismark.

Last weekend, Australian Property Monitors reported the auction clearance rate hit 79 per cent in Sydney, the best performance recorded in nearly three years. Melbourne's sales level was also a robust 73 per cent, according to the Real Estate Institute of Victoria.