House prices will rise this year as an acute property shortage amid surging immigration outweighs higher mortgage costs, according to The Australian Financial Review’s survey of 30 economists who put the increase at a modest 2.5 per cent.

That was the median rise, according to the economists, with eight respondents to the quarterly survey tipping a slide in property values. Despite a jump in mortgage costs, home values climbed more than 8 per cent nationwide last year, defying gloomy predictions and a sharp turnaround from the 5 per cent drop in the previous year.