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Syd, Melb home prices tipped to rise

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Sydney and Melbourne home prices are tipped to keep rising, with experts saying the booming housing markets are either in or entering a "bubble".

A major survey of property experts has found that more than half expect Sydney prices to continue rising for another six or 12 months, while three quarters believe more increases are on the way for Melbourne.

More than half the property valuers, financiers and analysts surveyed by the Australian Property Institute (API) also believe both cities are either in or entering a property bubble.

Senior vice president of the API's NSW division, Ian Muir, said the survey indicated that Sydney home prices were expected to reach the peak of the city's property cycle in 2016 and move past the top a year later.

Melbourne was expected to pass the top of its cycle next year but remain close to the top in 2017.

"In other words, residential property in both cities is seen as remaining near the top of the property cycle for some time," he said.

The findings come a week after Reserve Bank governor Glenn Stevens described Sydney house prices as "crazy".

Treasury Secretary John Fraser has also warned that low interest rates had created a housing bubble in Sydney and some parts of Melbourne.

Each of the property experts surveyed by the API said low interest rates were a major driver of demand for homes in Sydney.

Most believed foreign investors also played a significant role, with population growth and a low supply of housing during the past decade also having an impact.

Similar factors were behind Melbourne's booming market.

However the experts said they believed negative gearing was the main driver behind demand for homes in Brisbane and Perth.

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Survey finds property experts expect prices to continue rising for six months to a year.

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