Australia’s housing market is likely to record "moderate" price gains in 2018, says Louis Christopher of SQM Research in the latest Housing Boom and Bust Report.

The gains are unlikely to keep pace with those of 2017, says Christopher, with Sydney prices leading the slowdown. Melbourne’s property market is also likely to lose some momentum, he said.

SQM Research’s base-case forecast, with rates on hold and the economy steady, for capital city price growth puts Hobart in front for anticipated price gains.

Hobart is likely to "remain the fastest growing city in 2018", says Christopher, anticipating price growth of between 8 per cent and 13 per cent next year.

"The combination of a fast economy and housing supply shortages (are) likely to ensure the second year running of double-digit price rises for that city,” he said.

Overall, Christopher predicts dwelling prices will rise between 4 per cent and 8 per cent in 2018.

Christopher is forecasting the Hobart, Perth and Darwin markets will offset some of the slowdown in Melbourne and Sydney in 2018.

Source: SQM Research.

Brisbane’s property market will experience slightly stronger gains than those posted in 2017, with property prices forecast to rise between 3 per cent to 7 per cent, says Christopher. An overhang of supply will hold the Brisbane market back from a faster rate of inflation, he says.

Christopher says APRA's tightening of lending to investors has helped to prevent the Sydney and Melbourne markets from overheating.

“The authorities were right to take action earlier this year to restrict investing lending by banks. Failure to have taken action would have resulted in out-of-control Sydney and Melbourne housing markets, where additional aggressive monetary policy may well have triggered a large fall in dwelling prices in 2018,” he said.

Read more about property prices in Australia:

Tasmanian real estate boom spreads island-wide

Tasmania market hits 13-year high: REIT

Melbourne property market continues to streak ahead of Sydney's