Australian home price growth will slow to about 5% in the next 12 months as falling affordability and the end of government stimulus measures constrain gains, said AMP Capital Investors.

While an undersupply of housing and rising employment will lift demand, the winding up of the first home-owner incentives and rising mortgage payments will keep price increases in check, Shane Oliver, head of investment strategy at Sydney-based AMP, which manages about $90bn, wrote in a note today.