Heat is coming out of housing boom: PMI

The PMI Residential Property mid-year study found that while the residential property market was cooling, there would be no sharp price correction in the offing.

While price growth had continued in most regions so far this year, nationwide real estate activity had fallen 14% from its mid-April peak.

Residential property prices were likely to ease across 2006, but continued economic growth of between 2.5% and 3% would make a sharp price correction unlikely, the study found.

Falling interest rates over 2006 could also make real inflation adjusted property prices bounce in 2006/07.

In June 2007 property values would be lower than at present, the study found.

PMI Australia and New Zealand managing director Ian Graham said the study found that there was no "discernable impact on people's ability to service their mortgages".

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