With predictions of a looming economic recession and escalating unemployment rates, many property buyers are scared of venturing into the property market even as interest rates fall to record lows and bargains begin to emerge.
However, the current buying opportunity may end sooner than you think when the property market recovers towards the end of this year, according to a property expert.
Malcolm Reid, a property developer and a former economist for the Reserve Bank of Australia and the Australian Post Office, said that, after a sluggish performance in the beginning of the year, property prices will rise again, significantly.
"As an economist who follows many economic sources each month in the USA, UK and Australia and all the property issues in Australia, I am completely convinced that the second half of 2009 will see an enormous rise in most residential rents and prices after a mild low in the first half. As usual, it will take all but the hardened property investors and respected property forecasters by surprise," he said.
He noted that rents have risen strongly throughout 2008 because of a fundamental imbalance between rental accommodation sought and the supply of such accommodation, especially for Melbourne apartments near the CBD, Docklands and inner suburbs.
"Population, as the main driver in rents and property prices, is expanding rapidly, especially in Melbourne. New births are booming - partly due to incentives - and immigration/internal net migration is the strongest in years and forecast to continue as far as the eye can see. We need approximately 170,000 additional accommodation units per annum to satisfy this growing demand.
"Our building industry at full stretch has rarely achieved this figure. The poor sentiment has caused many developers to delay, defer or completely abandon proposed projects, so supply is falling further and further behind demand for rental properties.
"Due to the inevitable long lead times, rents MUST continue strongly for a minimum of two to three years."
With interest rates falling rapidly to all-time-low levels, Reid said investors can now selectively buy at positive cash flows. "Many smaller investors have been scared off the stock market - understandably - and will enter the property investment market as soon as it seems to have stabilised. Markets always turn before the stats are there to prove it. The best property commentators are almost universally bullish now about the Australian property market after a certain amount of mortgagee sales in the first half."