Australian's golden run of property price growth will end "sharply" this year, predicts global credit agency Fitch Ratings.
In a new report, Fitch predicts that a combination of low affordability, exposure to US rate hikes, and prudential regulations will add up to a much slower rate of growth in a number of Asia-Pacific countries including Australia.
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"The pace of house-price growth should decelerate particularly sharply in Australia and New Zealand this year; while the decrease should continue in Singapore, with prices dropping by a further 5 per cent from last year," it says.
Fitch forecasts growth will clock in at about 2 per cent in Australia in the coming year about half that likely across the ditch in New Zealand.
For Australian capital cities that is well down on the 8 per cent average annual growth enjoyed over in the last three years, according to CoreLogic RP data.
"Stretched affordability and further compression of rental yields are likely to be key factors driving down price growth in Australia," Fitch says in a media statement.
"This is especially the case in Sydney and Melbourne, where price appreciation in recent years has outpaced wage growth - leading to decreasing levels of affordability.
Weaker demand from investors has also already begun to affect mortgage demand, as falling rental yields and new prudential measures restrict the growth of investment loan portfolios."
Despite the slowdown Fitch predicts the markets will remain relatively stable due to low interest rates and steady mortgage performance.
"Steady Australian performance reflects increasing levels of servicing buffer from lower interest rates, a stable unemployment rate, and price appreciation opening up additional equity for borrowers," Fitch's report says.
"Low wage growth and rising living costs would mean performance coming under pressure if rates rise, but this is unlikely in 2016."
Fitch also notes that low interest rates and solid employment may also weaken attempts by regulators to cool the market.
Although it does predict that investors will be less of a force.
"Fitch expects weaker demand from investors as a result of a further compression in rental yields, increased costs - a result of prudential measures restricting the growth of investment loan portfolios - dwindling prospects for capital growth in the capital cities, and increasing transactional costs," it says.