Global credit agency Fitch Ratings predicts a "sharp" halt to Australia's golden run of property price growth, The Sydney Morning Herald reports.
There will be a much slower rate of growth in several Asia-Pacific countries including Australia and this is attributed to a combination of low affordability, US rate hikes, and prudential regulations, Fitch predicts on a report.
"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.
It also forecasts that in the coming year, the growth will clock in at about 2% in Australia and half of that across the ditch in New Zealand.
CoreLogic RP data says that Australian capital cities have enjoyed 8% annual growth for the last three years and the current predicted number disappoints.
"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."
But thanks to low interest rates and steady mortgage performance, Fitch believes that the market could maintain its stability.
"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."
Regulators could attempt to cool the market, but low interest rates and solid employment could just make their attempts futile, adds Fitch.
However, it believes that investors won't continue to be much 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.
