Apartment living is expected to grow in popularity next year, driving increases in dwelling prices.
Colliers International has released research suggesting that dwelling prices will continue to grow in 2014, with buyers showing an increased propensity toward inner city apartment living.
Colliers International managing director of residential Peter Chittenden said falling interest rates and rising confidence levels drove strong dwelling price growth of 7.9% across Australia's capital cities in 2013.
"Price growth was particularly strong in Sydney, Melbourne and Perth with values in Sydney rising up to 11.6 per cent over the year," Chittenden said. "With such a significant increase, there is a question as to whether the Sydney market can sustain this level of growth in 2014."
Chittenden said a lower interest rate environment had offset price rises to support housing affordability, but that the pace of growth in Sydney and Melbourne could see the RBA
forced to "adjust its settings accordingly" in 2014.
Chittenden also claimed 2014 would see a rise in popularity for inner city apartment living.
"This trend is evident in the proportion of unit approvals which has risen significantly since mid-2009 from 25 per cent to 43 per cent in late 2013. It is driven primarily by Sydney and Melbourne where apartment approvals have exceeded those of houses," he said.