By Vivek Mishra

BENGALURU (Reuters) - Australia's housing market outlook has improved significantly, with home prices expected to on average stagnate this year compared to the near double-digit fall predicted three months ago, according to a Reuters poll of housing analysts.

After slumping about 9% from May 2022 to February, Australian home prices rose for a second straight month in April, suggesting the fall in the country's property prices had bottomed out and the market was now rebounding.

That turnaround was partly down to expectations the Reserve Bank of Australia is mostly done with its policy tightening, enticing cash-rich home buyers to go house hunting again.

The May 16-31 Reuters poll of 14 property analysts showed average home prices stagnating this calendar year, a significant improvement from the just over 9% fall predicted in a March survey.

They were then forecast to rise 4.5% in 2024, almost twice the expected rate from the previous poll.

However, major local banks have differing views on the outlook. While ANZ and Westpac forecast no growth this year, CBA expected a 3.0% rise and NAB predicted a 4.0% decline in prices.

"The recent upturn has come as a surprise to us," said Adelaide Timbrell, senior economist at ANZ, who said the sharp rise in interest rates previously had them forecasting a 10% decline this year but said "we now think most of the weakness is behind us."

"We did expect that strong household income growth and large savings buffers would provide a cushion for the fall in house prices. It's possible that these are providing more support than we originally anticipated," she added.

Analysts also revised their forecast of the peak-to-trough fall to a median of just under 10% from the previous survey's 16% decline.

That was modest compared to the 20% top-to-bottom drop predicted in New Zealand house prices and only a fraction of the 25% surge during the pandemic alone.

"The shift upwards...has arrived earlier than we anticipated," said Gareth Aird, head of Australian Economics at CBA, which has the country's largest mortgage book. They had long held a peak-to-trough forecast decline of 15%.

"We are almost at the top of the RBA's hiking cycle, which means the headwind on property prices from rates ratcheting higher has largely run its course."

The RBA has hiked rates by 375 basis points so far and it was a close call in a separate Reuters poll as to whether it was now done at 3.85% or would go for one more 25 basis point lift. Markets are pricing in an August move to 4.10%.