Credit rating agency Fitch Ratings predicts Australian house prices will experience more moderate increases this year. The agency predicts growth of just two percent in 2016, less than its 2015 estimate.

The Fitch Ratings' Global Housing and Mortgage Outlook 2016 report cites high unaffordability, slowing population growth, higher levels of new home building and a further pull-back from investors as factors affecting house price growth.

Last year, it predicted four percent growth in house prices, but according to CoreLogic figures, capital city house prices rose by 8 percent in 2015, with Sydney and Melbourne experiencing growth of more than 11 percent.

"Lower population growth, which has reached a decade low of 1.35 percent, coupled with better building activity should lead to a better balance in supply and demand and put less upward pressure on prices," Fitch Ratings Australia managing director Ben McCarthy told The Australian Financial Review. He added that last year's "vigorous investor market" saw investors take out more than half of all new loans, but this activity has cooled considerably. 

Knight Frank and SQM Research have a far more bullish outlook on Sydney house prices, forecasting 10 percent and 4 to 9 percent rises, respectively.