Property rises might be taking a breather after a year of superheated growth, but one investment banker has bad news for most aspiring home owners: Australian house prices will keep getting higher and the government will do nothing to prick the bubble because the country simply can't afford it.

And any hint of instability in China could send a wave of new money into the Australian market, says Saxo Capital Asia macro strategist Kay Van-Petersen.

Houses and apartments in Australia, particularly Sydney and Melbourne, have never been more expensive. The median house price in Sydney hit $1 million in July, said the Domain House Price Report, and investment bank Goldman Sachs estimates the markets in Sydney and Melbourne are almost 20 per cent overvalued.

House prices are on track to rise by a whopping 9.8 per cent this year, say numbers released this week by the Australian Bureau of Statistics, which showed national price growth was 4.7 per cent between the March and June quarters.