Price growth for homes in Australian will slow to about 4% in 2015, Fitch Ratings has forecast in its Global Housing and Mortgage Outlook.

The global ratings giant says an “affordability ceiling” combined with a potential rise in interest rates in the medium term, will moderate recent surging price growth. Prices will not change in Perth, says the report, but in Sydney and Melbourne they are forecast to rise by between 3% and 4%.

House prices in Australian cities rose 8.9% in the 12 months to October 2014, it noted.

“The rate of growth has been slowing since it peaked at 11.5% in April,” the report says, noting that that prices in Australian cities was at an annual rate of 8.9% in October 2014.

Fitch Australia’s managing director of structured finance, Ben McCarthy, says housing affordability in the country had reached its peak: Speaking to the Australian Financial Review, he said:  “People just can’t afford to pay much more for housing. At 4% growth, prices will still rise higher than people’s incomes.”