AMID world economic gloom and on the eve of the biggest auction day so far this spring, several analysts are predicting 5 per cent price growth for Sydney property over the next year.
About 500 auctions are scheduled for today - the biggest line-up in four months but 27 per cent down on the same weekend last year.
''Buyers and sellers remain wary and with the seemingly constant flow of negative news from overseas economies, this is set to continue in the short term,'' the Australian Property Monitors economist Andrew Wilson said.
But longer term, speculation that interest rates will not rise until late next year has encouraged the analysts.
After a flat year, both APM and BIS Shrapnel are predicting 5 per cent growth in Sydney median house and apartment prices over the next year. BIS Shrapnel is going even further, tipping 6 per cent growth a year on average (but not each year) until 2014.
The managing director of BIS Shrapnel, Robert Mellor, said there could even be a flight to residential property as investors abandon the sharemarket.
''Over the next six months, no upward mobility in shares will encourage some investors to probably put some good money into residential,'' Mr Mellor said.
There are no analysts predicting a strong spring property market. However, some believe there could be a surge in demand for established properties priced up to $600,000, as first home buyers try to meet the year-end deadline for stamp duty concessions. From January 1, first timers will have to pay full stamp duty on all but new property.
Ariadni Papadopoulos, 38, is optimistic about today's auction of her one-bedroom 1970s apartment in Surry Hills. There are 15 contracts out, half of them to first home buyers.
''I think because of the area and the lack of apartments within that price range, I'm in a position that's quite unique,'' Ms Papadopoulos said.
Today's Spring Property Guide in Domain reports that Surry Hills apartments have had 16.5 per cent growth over the past year. Edgecliff, North Bondi and Glebe recorded 25 per cent growth.
For houses, the best performer was Newington, with 20.5 per cent growth in the median to $788,000. Four record sales in the million-dollar range have helped push up the median price over the year, but agents say prices have tapered off since March.
Many inner-west suburbs did well over the year for houses, including Strathfield South with 18.9 per cent growth and Summer Hill with 17.4 per cent.
East houses were a mixed bag. The expensive suburbs of Vaucluse and Bellevue Hill dropped 14.6 per cent and 13.2 per cent respectively. Woollahra went up 11.1 per cent but Paddington fell 6.6 per cent. Surry Hills rose 2.2 per cent.
In the north, Mosman's median price jumped 5.1 per cent over the year. ''That does surprise me a little bit,'' the director of Richardson & Wrench Mosman, Richard Simeon, said. ''But there is so much less stock on the market and properties are turning over.''
The top end continues to be a struggle, with properties selling for big discounts. Midweek auctions in the east - where some of the most salubrious addresses are on offer - have been a challenge for sellers and their agents.
At one group auction recently, just three sold of the nine that went under the hammer.
However, improving auction clearance rates of close to 60 per cent over the past couple of Saturdays have been an encouraging sign for sellers.