Several factors are likely to boost the outlook for capital city housing markets over the rest of the year, according to a report from Archistar.

The report said buyer and seller activities have started strongly this year, as housing markets report record-level conditions.

"The buyer and seller momentum of the final months of 2020 has predictably continued into 2021 with the clear prospect of strong home price growth to be sustained for most of the year," the report said.

Positive affordability, the report said, continues to drive the markets in Sydney and Melbourne despite the price gains over the recent months.

"With mortgage rates having fallen by over 1% and incomes have Increased by over 6% since 2017, there is significant capacity for buyers to push up home prices," the report said.

Another factor that could boost housing market activity is the recovering economy.

"With the spectre of further coronavirus shutdowns now receding with the rollout of the vaccination program — buyer and seller confidence is set to remain sky high," the report said.

All capital cities are expected to record robust price increases over the next months. However, the growth rates are likely to slow through the second half of the year as affordability declines.

"House price growth will likely reach record levels with the Melbourne and Sydney markets likely to exceed 10% over the year," the report said.

Collections: