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As prospective home buyers look for the best time to jump into the market, many of the nation’s top housing analysts have forecast modest residential price growth of about 5 or 6 per cent in 2010.

Some of Australia’s leading economists believe demand for homes will stay strong as investors and upgraders pick up the slack from first home buyers.

Happily, the nation is emerging from the global financial crisis with strong population growth, the lowest interest rates in decades and a rosier jobs outlook.

Most economists, industry heads and real estate agents see the sun continuing to shine on residential property next year.

BIS Shrapnel senior project manager of residential property Angie Zigomanis predicts steady growth of about five to six per cent in established residential property next year.

‘‘I’d expect you’d see steady low-to-mid single digit growth next year,’’ Mr Zigomanis said. ‘‘Over the next two or three years I think you’ll find interest rates will keep slowly edging upwards and it’ll keep a lid on the massive double digit price growth we were seeing previously.’’

Annual established house prices in Australia grew 6.2 per cent to September 2009, the latest Australian Bureau of Statistics data show.

Investor demand and upgrader’s demand picked up in the last few months of 2009 and would continue well into next year.

As city rents increased due to low vacancy rates, more first home buyers in the 25 to 35 year age group would be encouraged into the market.

Housing Industry Association chief economist Harley Dale said Australia would experience significant 20 to 25 per cent growth in new housing stock through to mid 2011.

He also supports predictions of about five to six per cent growth in established homes next year.

Mum and dad investors, who tended to look at the same type of investment housing stock as first home buyers, were beginning to step in to fill the gap.

A shortage of housing, low interest rates and the first home buyer’s grant had helped support prices, he said.

Meanwhile Commonwealth Bank economist James McIntyre cites wages growth as a key part of the equation, while predicting significant skills shortages emerging within 12 to 18 months.

He said house prices would grow in the ‘‘mid single digits’’ next year, but those increases depended on how the build up of wages translated to other sectors of the economy.

‘‘If the whole economy catches fire with a strong growth in wages, then that will really be supportive of a continued strong growth in house prices.’’

He dismissed suggestions the Reserve Bank of Australia (RBA) had waited too long to increase interest rates and said there was a very low chance of house prices falling.

It would take a ‘‘significant global shock’’ and an unprecedented surge in building approvals of between 200,000 and 250,000 homes to see significant weakness in house prices, he said.

Ray White Real Estate chairman Brian White believes Australia has avoided a dramatic downturn in house prices.

‘‘All of us seem to have forgotten the anguish of the first four or five months of the year and we’re trying to understand just how on earth the year finished so strongly,’’ Mr White, who heads the nation’s largest group of real estate agencies, said.

He also forecast growth of about 5 per cent in 2010 and said it had become a vendor’s market.

‘‘Now we’re going into the new year with a number of interest rate increases occurring but with quite strong growth.’’

AAP and SMH