A major economic and construction forecasting agency is predicting that home prices across Australia will fall in real terms over the next three years.

In its latest property market outlook, BIS Shrapnel has predicted real price falls of between 1 and 12 per cent across the capital cities by the end of 2018-19.

Australia's two biggest capital cities, which have led price gains over the past few years, are not expected to be immune from the decline.

Sydney prices are expected to fall just 1 per cent over the next three years from last month's level, but BIS Shrapnel said that would be a 9 per cent fall in real terms, given the general rise in the cost of living and wages over that period.

Melbourne is expected to see a similar easing in prices over the next three years.

Both cities are seeing a boom in apartment construction, which is boosting supply at the same time as previously very strong immigration flows are slowing.

Sydney is forecast to remain slightly undersupplied, but a more balanced market is tipped to dampen property prices, while an apartment glut is tipped to push Melbourne into oversupply, which will combine with economic weakness from the shutdown of the automotive manufacturing industry.

"While the excess stock is expected to be concentrated in the apartment sector, there is nevertheless likely to be an impact on house prices as well," predicted the report's author, Angie Zigomanis.

Home price rises won't beat inflation: BIS Shrapnel

Brisbane is expected to be a two-sided market, with houses relatively strong, but apartments posting fairly steep falls due to oversupply in the inner-city.

Perth and Darwin are expected to continue feeling the fallout of the mining bust, with prices down around 8-9 per cent in real terms for houses and bigger falls expected for units.

Perth's median house price is expected to be 23 per cent lower in real terms by the end of 2018-19 than it was at the peak of the boom in March 2007.

However, the biggest pain over the next few years is expected to be felt in Adelaide, which is set to be hit by another wave of job losses as its automotive manufacturing sector shuts down.

Mr Zigomanis said this could tip the market into oversupply as more people move interstate, with home price falls of up to 12 per cent in real terms.

"South Australia already has the highest unemployment rate of the states and continues to face headwinds in a number of industry sectors, with jobs in the steel sector at risk and jobs in the automotive sector to decline," he noted in the report.

Even in Hobart, where house prices are expected to rise 7 per cent over the next few years, dwelling prices are expected to fall in real terms, as they are in Canberra as well.

BIS Shrapnel said that, apart from increasing supply, slowing population growth and reduced investor demand due to tighter banking restrictions were features common to most markets that would weigh on prices.