ANZ bank has tipped house price falls the year after next as the pandemic boom in Australian housing comes to an end.

Felicity Emmett and Adelaide Timbrell from the bank's economics team are forecasting that this year's price gains of 20 per cent-plus will slow to 6 per cent next year before prices start falling in 2023.

"Affordability constraints are biting, new listings have lifted strongly, and macroprudential tightening and higher mortgage rates are set to constrain lending over the coming year," they wrote.

"And while a return to immigration in 2022 will be a plus, these negatives are likely to more than offset that positive."

However, would-be buyers hoping to snare a bargain in 2023 are likely to be disappointed, the economists warn, tipping a price fall of just 4 per cent that year, which would not even erase next year's forecast gains.

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One sign of the market "rolling over", as they described it, is the recent weakness in home borrowing, notably among owner-occupiers, which generally runs ahead of movements in prices.

"New lending finance to owner-occupiers has peaked: first home buyer finance has been trending down since the top in January, finance to other owner-occupiers has fallen 10 per cent over the past two months," they noted.

"Investor finance growth remains positive after more than doubling in the year to May."

Rents on the rise

Investors are not only chasing the capital gains they have witnessed in the market over the past year or so, but are also seeing strongly rising rents after a period of weakness, where rents fell sharply for inner-city apartments in particular.

"Earlier gaps in rental growth between units and houses, and capital cities and regions, have largely closed," noted ANZ.

That has led to worsening rental affordability across the capital cities, as well as many regional areas where vacant homes for rent are scarce and demand has picked up, in part due to the increased ability of many employees to work remotely.

While housing investors are increasingly moving into the market, so are people taking the opportunity to sell their property.

New listings of properties for sale since October have been at their highest level in at least the past four years, giving buyers more choice.

The increase in the number of properties for sale is coming at the same time as some buyers are pulling out due to affordability constraints.

Rising rates and regulation a risk

Ms Emmett and Ms Timbrell warn that rising interest rates may further erode affordability.

ANZ is currently expecting the first official cash rate rise from the RBA in the first half of 2023, which would push up variable mortgage rates, but the economists warned fixed mortgage rates have already been rising steeply.

"A faster-than-expected rise increases the risk that prices slow more than we currently expect. And vice versa," they noted.

There is also the possibility that the bank regulator APRA will bring in further restrictions on home lending, in addition to the recent increase in the serviceability buffer from 2.5 to 3 percentage points above current mortgage rates.

"A further increase in the serviceability buffer is appealing given that it acts as a cap on leverage, and is relatively easy to implement," noted the ANZ economists.

"Also, the recent lift in high debt-to-income (DTI) loans has been a focus, but to avoid constraining some high-DTI borrowers that are actually low risk, combining DTI and LVR (loan-to-valuation ratio) restrictions looks another likely possible move in our view."

However, ANZ's analysts said the recent rise in fixed mortgage rates, the increase in new property listings (which is likely to put something of a cap on further price rises) and the slowdown in credit growth may obviate the need for further restrictions by the regulator.

As for what will happen across the different capital cities, ANZ expects Brisbane (+9 per cent) and Hobart (+8 per cent) to experience the biggest price rises next year, with Adelaide, Darwin and Perth all expected to rise by a below-average 3 per cent.

Adelaide and Canberra are currently forecast to see the steepest prices declines in 2023, of around 6 per cent, but all capitals are expected to see a drop.