PropTrack's Market Outlook report, released on Thursday, predicts that median property values in the city of Sydney will trend upwards, with growth expected to be in the range of 3-6 per cent.

The forecast comes amid continuing challenges such as soaring mortgage costs and the possibility of further interest rate rises.

The expected price increases will see the average value of houses, flats and townhouses in Sydney climb to a new range of around $1.05 million, up from just under $1 million at the start of the year.

House price growth is expected to be broadly flat in 2024 as affordability and more home sales, including those coming off expiring fixed rates, help moderate the market.

Home prices in the Harbour City have climbed about 2% this year, largely due to the extreme imbalance between housing supply and demand.

Lacklustre construction activity, developer bankruptcies and homeowners' reluctance to list their properties for sale have all contributed to this climate.

Soaring rents are also forcing more tenants to become first-time buyers, while high levels of migration are increasing demand for property.

Cameron Kusher, PropTrack's director of economic research and author of the report, said the recent price growth marked a shift in the property market, reversing the decline of the previous six months.

Despite rising interest rates and declining borrowing capacity, we have seen prices rise and expect them to continue to rise moderately in the coming months, he said.

The outlook for 2024 is less clear, with a large group of fixed-rate borrowers due to see their mortgages reset to around 6 per cent from the current rate of around 2 per cent.

Mr Kusher said a sudden increase in sales by homeowners unable to pay their mortgages would be a drag on the market, but it was hard to know if and when this would happen.

"Interest rate changes work with a lag," he said. The likely impact of higher repayments on these borrowers will not be apparent until 2024. At this stage, we are forecasting moderate house price growth in 2024."

PropTrack's latest forecast follows similar predictions from major banks, including NAB, which in July predicted Sydney house prices would rise by 6.9 per cent this year.

My Housing Market economist Andrew Wilson said it was unlikely there would be a significant rise in forced sales that would push down house prices while unemployment remained low.

He says: "Sydney's economy is also in good shape, which is an important factor." We expect most households to retain their family home for as long as they have the income to do so.

The forecast for house price growth this year reverses previous predictions of a massive fall in house prices by 2023.PropTrack had predicted Sydney house prices would fall by 9-12 per cent.

The expectation at the time was that rising interest rates would dampen the desire of potential buyers to purchase a home and that the supply of property would gradually increase.

Factors that were not anticipated in earlier forecasts included a record surge in immigration, the war in Ukraine disrupting the global construction supply chain and the collapse of several construction companies.

Households are saving more than we expected.

(Homeowners) may deplete those savings as interest rates rise, Mr Kusher said.

"We're also hearing in Sydney and around the country that (some people) are worried about having nowhere to go if they sell their house. It's become a self-fulfilling prophecy. No one is selling because no one is selling. If sales go up, it will give home buyers more choice and remove some of the upward pressure on house prices."