HOUSE prices will not start to rise in Cairns for another 18 months, a new report says.

The BIS Shrapnel report says by 2015 the median house price in the city will increase to $395,000, up $50,000 from the current figure of $345,000.

That compares to Townsville rising from $365,000 to $430,000.

The median price is the sale price of the middle-priced property from a list of properties sold each month.

Report author Angie Zigomanis said until 2015, Cairns would "continue to be dampened by under performing economies and excess supply."

He said Townsville was doing, and would do better, than Cairns.

"The median house price in Townsville has held up better than in Cairns since the worst period of the global financial crisis in 2009," Mr Zigomanis said.

"While both local economies were impacted by falling resources investment, sharp declines in residential construction and a weak tourism sector, the more diversified economy in Townsville has served to better support prices.

"Both centres are expected to benefit from the rising investment in the resource sector over 2012-13.

"With both Townsville and Cairns offering services to these mining projects, as well as a base for employees in and out of the projects, population growth should benefit with a rising shortage of dwellings emerging until new supply catches up."

Real Estate Institute of Queensland zone chairman, Greg Clyde-Smith, agreed with the findings, but said a shortage of quality houses could be on the horizon.

"The only thing that might differ from the report is that I believe we are moving from a buyer’s market to a seller’s market, and the reason for that is we’re starting to see a shortage of stock," Mr Clyde-Smith said.

"That might not push up prices, but I do see a bit of firming, so while we won’t see rises, we won’t see any more falls."

Mr Zigomanis said the growth in Cairns over three years to 2015 was expected to be 15 per cent.

He said the next 12 months would remain "weak" but signs of improvement should start in 2014 and build up in 2015.

"As the oversupply starts to run out there will be more investors back into the market and more new houses being built," he said.

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