In NSW, where Sydney house prices dipped by 1.3 per cent in April, the ANZ PCA index of house price growth expectations sank to just 1.7 points from 29.6 in the last reading three months ago. In Victoria the index also fell to 7.1 points from 29.1.

The Property Council's NSW executive director Glenn Byres said the market had become much more sensitive to key property data and financing costs.

"It wasn't going to take much to pull back," Mr Byres said, "Tighter lending conditions and capital controls have started to nudge their way through on what will happen on house price growth."

With many owners trying to sell ahead of an expected slowdown in price growth, developers are also nervous about the future. Building approvals for apartments in three months to May fell 28 per cent as banks withdrew financing for development. New taxes, from both state and federal governments on foreigner buyers have also weighed on the market.

The head of the nation's biggest apartment builder Harry Triguboff said there had been a noticeable change. "The market [has been] a bit slow since the beginning of July," he said, "Added to that was that prices didn't go up."

Multiple economists have also signalled their expectations for a step down in price growth with UBS "calling the top" in April, CoreLogic-Moody's Analytics Australian Home Value Index forecasting prices will fall marginally between 2018 and 2020 and HSBC forecasting last week that national property price growth will halve over the next 18 months. BIS Shrapnel has called a low 1 to 3 per cent house price growth across the national markets.

Most of the house views of Australia banks and economic analysts are forecasting a soft landing in house prices with official interest rates unlikely to rise until the end of 2018.


Others such as Ray White chairman Brian White have been more circumspect about the forecast drop in growth.

"The property market has been remarkable across the world and Australia is no exception, but one of the things that can occur when there are expressions of concern or expressions of doubt is that people start thinking of getting back in," Mr White said.

"We just had our biggest June ever, it was 20 per cent above June last year and its our third highest of any month on record."

The drop in expectations on house price growth however is also contributing to fears of weaker consumer demand and this has also dragged down expectations of capital growth in shopping centres.

The ANZ/PCA survey, which covers landlords, real estates agents, valuers and developers among others in the industry, showed expectations of retail property capital growth had also more than halved since the last reading three months ago.

Across Australia the index recorded a fall in retail property capital growth expectations to 3.3 points from 10.7 points. Queensland was hardest hit with the index dropping to 0.4 points from 11.2 points.


Record breaking deals have been transacted for retail property assets across the country with large format retail landlord Aventus Property Group paying a record yield to snap up two Sydney centres for $436 million in May.

Among the property experts Quintessential Equity boss Shane Quinn has already raised concerns saying investors buying commercial property on record low yields were risking investment "suicide".

The Reserve Bank of Australia's has repeated warned over commercial property prices with early warnings over a year ago about domestic risks in those markets.

The ANZ/PCA survey also indicated a drop in expectations for capital growth in office towers and retirement living homes.