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On the back of affordability concerns, restrictions on investor lending, increased supply and unpredictability of foreign demand, apartment prices in most Australian capital cities are likely fall in 2016.

That’s the view of the National Australia Bank who are forecasting a national drop of 1.2% in the year ahead.

“Going into 2016, momentum in the market is expected to flatten out as credit restrictions on investors and worsening affordability bites in Sydney and – to a lesser extent – Melbourne, where foreign investment is a larger element,” say the NAB.

“Additionally, the existing pipeline of residential construction remains large, especially in the unit/apartment market, which will more than offset new demand.”

“Consequently, unit prices are expected to fall 1.2% over 2016,” says the bank.

For houses, the NAB predicts property prices will rise 1% over the year, led by an expected 3% increase in Brisbane.

Here’s the bank’s forecasts for apartment and house prices by capital city in the year ahead. Interestingly, the CoreLogic RP Data five capital city home value index has already gained 1.6% year to date.

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