AUSTRALIAN RESIDENTIAL PROPERTY MARKET PREDICTED TO SLOW.

SYDNEY, June 3 Asia Pulse - Despite a projected slowdown in Australia's residential property market during this year and next year, house prices are expected to keep rising, according to a new report.

And Sydney's lead on the country's booming home market looks set to continue, according to the report by economics forecaster BIS Shrapnel.

BIS said the end of the additional $A7000 ($US3,962.7) First Home Owners Grant, rising interest rates and modest economic growth would dampen, but not reverse, the sector's growth between 2002 and 2005.

The economics forecaster said property values were likely to rise between six and 27 per cent across the country over the three years, depending on the capital city.

BIS forecast the median home price in Sydney, the country's most expensive city, would rise 22 per cent from $370,000 to $450,000 over the period.

Brisbane's and Darwin's home markets would grow faster over the period, but would still trail the harbour city.

Brisbane would grow the fastest over the period with its median home price jumping 27 per cent, from $180,000 to $228,000.