Mr Eslake said the Australian property market was likely to stagnate for the next three years, but is not likely to fall much further.

With inflation likely to keep rising, the Reserve Bank will probably raise interest rates by around 0.25 per cent between June and September, 2006, he said.

Mr Eslake said interest rate increases had prevented a threatened recession, but stopped Australians from borrowing against actual or expected house prices.

As a result, consumer spending has slowed.

Around 150 attended the seminar at the Bowral Country Club, eager to hear Mr Eslake's predictions on the Australian economy, interest rates, the share market and international exchange rates.

Mr Eslake said the Australian economy will be sluggish in the first half of 2006, but will pick up in the second half of the year and in 2007 as a result of growth from commodities exports, particularly in states such as Western Australia.

Full story: SHN, Monday, February 27, 2006.