A leading real estate economist believes there is no property bubble in Australia and house price growth may already be slowing.

Dr Nigel Stapledon, the Andrew Roberts Fellow in Real Estate Economics at the University of New South Wales’ Australian School of Business believes the growth in prices seen over recent years has been the “logical” result of surrounding conditions.

“The short [answer] is no, there is no bubble,” Dr Stapledon said.

“Low interest rates have caused a logical decline in yields and supported a move up in prices.”

Dr Stapledon believes there is very little similarity between Australia’s current situation and conditions in the United States that preceded the Global Financial Crisis.

“What we are not seeing is the development of the sort of supply or price overhang which precipitated the sharp decline in the US market during the GFC period.”

As bubble-talk has become more and more prevalent in recent weeks, many have called for an increase in the supply of housing stock to combat price rises and Dr Steadman believes action in that direction will reduce the rate of capital growth.

“What we are seeing in response to the rise in prices is a lift in supply which, as it hits the market, will deflate the price momentum seen in the past 12 months,” he said.

“Indeed, that might already be happening.”                                              

Dr Steadman pointed data from RP Data-Rismark showing Sydney's median house price fell 1.1 per cent in the month of May to $678,500 and Melbourne's dipped 3.6 per cent to $555,000.

In a Sydney Morning Herald article last week, Dr Stapledon said Sydney will soon see supply levels swell.

Dr Stapledon estimated 13,000 new units will be completed in Sydney by the end of the year and an average of 28,000 units will be completed each year for the next three years.