Investors who are looking to take advantage of the current buying opportunities in the property market should avoid areas that have further to fall, according to a leading property expert.

John Edwards, CEO of Residex, said that the housing markets across Australia are correcting and each capital city and state is suffering. But he noted that some areas offer better opportunities for bargain hunting than others.

"Sydney is the market which is furthest down the path of adjustment. There is every indication that it presents the best opportunity - along with Melbourne units - and has the lowest risk and highest likely statistical growth over the medium term," said Edwards. "This does not mean that you can buy anywhere in these markets and be assured of a good outcome. Some areas in these markets will make poor investments. A bargain in an area that fails to produce any growth and has a poor rental return is not worth having."

Edwards said that while the current environment offers opportunity for bargain hunting, segments in the markets which are further down the correction path will present little to no downside risk and will have stressed sellers.

"As a blanket rule, you should stay out of the Gold Coast, Western Australia and Brisbane markets unless you have done plenty of research. These markets will be ripe for the picking late in 2009 when they should be past their bottom, but currently they look as if the risks are too high. Sellers will still be holding unrealistic expectations."

When investing in the markets that have bottomed, Edwards offers the following tips:
* Any purchase needs to be at 'rock bottom' price. You are looking for bargains only. Remember, there are still risks on the horizon. You want to be in a situation where no matter what, you do not suffer losses. Even if a city has generally bottomed out, very large areas of that city will still have further adjustments to come. You have to identify the areas where these adjustments will be very minimal or where there will be growth.
* The total return is the important issue. You want investments that will provide growth. Lower levels of capital growth leads to a diminishing supply of properties, which results in higher rental returns. Decreasing interest rates coupled with increased rental returns presents lower levels of risk.
* Look for properties that have a quality position. By this, I do not mean views over rivers or harbours. It is about the needs in life for the tenant such as transport, shops and entertainment. Views in this environment will not save the 'value bacon'. Later in the growth cycle it will be time to better position yourself with these assets. The market still requires too high a premium for these attributes at the moment.