Homes priced at the lower end of the property market are going to offer the best opportunities for capital growth and drive the sector forward in 2009, according to experts.
Government incentives are drawing first homebuyers into the market, which will drive growth in the next 12 months said RP Data National Research Director Tim Lawless.
"This will be something of a turnaround for the property market because, over the last four years, it has been the affluent properties that have generally provided the best capital growth," Lawless explained.
"Market activity is already showing signs of increasing at the lower end of the pricing scale."
The worst period for Australian property values in recent times occurred in the second quarter of 2008, when prices fell by 1.9%, said Chris Joye, Managing Director of Rismark International. However, he stated that
the October and November sales data "suggests that house prices in the final quarter of 2008 will be broadly stable".
"Other indicators are also pointing towards an improving property market," Joye added.
"Variable rate borrowers should see their interest rates drop to around 5–5.6% [in the next few months], which will provide even more dramatic improvements in affordability."
First homebuyers now represent 22% of all residential property transactions, according to the ABS,and this figure is expected to increase during the first quarter of the year as affordability improves.
Investors should target 'strategically affordable' properties, Lawless added.
"These are homes with a reasonable price tag that are well serviced by public transport, arterial roads and the necessary amenities such as shopping, schools and health care facilities,"