The September data from Residex showed a flat market in most of the capital cities.

However, while there's been very little change from August, the result is better than a few months ago when values were falling significantly.

"If you look at the last month, it's better than the last quarter and sales have been holding up and increasing in Sydney and Melbourne, so despite talks about the falling number of listings out there, the sales are actually better in this quarter compared to the last quarter," says John Lindeman, business development manager with Residex.

There are also signs that the Reserve Bank of Australia’s massive rate cut, largely passed on by lenders, and the Rudd government’s $1.5bn First Home Owner Grant (FHOG) boost are already having a positive impact on the market.

John Edwards, chairman of Residex, says he’s already seeing increased energy in the property market after the increase of the FHOG to $14,000 for purchase of an existing home and $21,000 for newly constructed homes.

"The federal government's actions clearly indicate they’re not prepared to see our housing values deteriorate any further," says Edwards.

"They understand our housing markets have a significant multiplier effect and consequences for our economic activity. And they know if they fall significantly in value, it will result in higher defaults and reduced consumer confidence, fewer jobs, and greater potential for our banks to get into trouble."

He says the move has been delivered to those areas of the economy which provide the most flow-on impacts and keep our economy moving.

"All involved in housing can take heart from the actions which tell us the government isn't going to allow our housing markets to go the way of the UK and US markets. It tells us that, if we have available cash, now is the time to find the bargains and make our investments, because there'll be few times like the current in the future."

Concerns about oversupply in the NT capital – home to fewer than 100,000 people – continue to plague the region, with experts maintaining that Darwin is a risky market to buy into.

"We should now see the oversupply in the foreshore region and the gradual worsening of the economy across the NT take effect on the property market, although this weakening should be lessened by the recent cuts in interest rates," says Paul Smith, marketing director, Braxton Chase.

Supply levels in Palmerston have recently received a boost, following the September announcement from planning and lands minister Delia Lawrie that a $50m plan to release 3,000 new residential allotments will proceed in 2008/09, brought forward from 2010/11.

The lots will be developed in the new suburbs of Johnston, Zuccoli and Mitchell, with up to 200 blocks expected to be released in 2009.

The first residential lots in the nearby suburb of Bellamack should be ready to buy and build at the same time.

Lawrie said 15% of the lots would be set aside for affordable housing, and Johnston will be the first suburb to be developed, with 850 lots, followed by 1,750 lots in Zuccoli and 400 in Mitchell.

The government had previously resisted calls to fast-track the release of more land due to fears it might flood the market. However, Lawrie says the estimated 300 new lots of land put into the greater Darwin market each year aren't sufficient to meet the increasing levels of demand.

"The marketplace is demanding … additional lots. We continue to be very determined to follow the release of land along the Berrimah corridor," she says.

"We're committed to ensuring that future land release occurs strategically, to ensure it doesn’t flood the market and devalue the investments of people who own property."

The key drivers of Sydney real estate are interest rates and high rents, which are enticing investors to look more favourably on the market.

"The high cost of owning a property and low levels of affordability in Sydney have forced buyers to put off purchasing and has pushed them into the rental market, which has dramatically increased the demand for rental properties across Sydney," says Mathew Tiller, NSW property analyst with PRDnationwide.

"The upside of this is that the increasing rental yields being offered in some property markets and the volatility that has been seen in the share market are slowly enticing investors back into the Sydney property market."

Real estate prices across Sydney have remained fairly flat during 2008, and the two big issues for the Sydney property market for 2009 will continue to be affordability and rents, Tiller says.

However, as the gap between rents and mortgage repayments continues to narrow – particularly in light of the fatter First Home Owner Grant that’s on offer – renters are increasingly beginning to weigh up their home ownership options.

"Downsizing is also a key driver, with many of those homeowners with expensive property and large mortgages opting to sell so they can keep the repayments within their budget," Tiller says.

In 2009, he believes that declining mortgage interest rates will cause the Sydney market to pick up, and says the areas that are "best poised for growth when the recovery occurs" are those which are affordable but, at the same time, still provide high rental yields.

"These areas include Sydney's inner west such as the Leichhardt and Bankstown Local Government Areas (LGAs), as well the St George region in the south," Tiller says.

"To the north of Sydney, the Ryde LGA is likely to see interest, with further infrastructure upgrades and a new town centre."

For first homebuyers and those looking to purchase a large home at an affordable price, the best deals and the most interest will be found in the western suburbs.

The western suburbs had seen a decline in values over recent years due to a decrease in demand.

Suburb spotlight: Dulwich Hill
Dulwich Hill, located roughly 10km from the Sydney CBD, are beginning to enjoy a new lease of life as a younger demographic settle in the area, to be near their CBD workstations and share in all that Sydney has to offer.

House prices had increased 6.6% in the 12 months to August 2008, according to RP Data, to reach a median price of $661,000.

Apartment values have grown 4% across the same period, to $335,000.

"Dulwich Hill is a progressive suburb that's experiencing a transitional phase, changing demographics and increasing popularity, which will ensure continued capital growth," says Anthony Kassis from Ray White Maroubra.

"Surrounded by suburbs like Newtown and Leichhardt, it's ideally situated and handily located to amenities that are virtually at your doorstep."

The suburb is close to major roads, and has its own train station.

"Residents have easy access to the city and other suburbs via rail services and the public bus system," Kassis adds.

Melbournes residential real estate market has shown signs of moderate stability in the face of ever increasing global market turmoil, and the recent cuts in interest rates are giving buyers the confidence they need to enter – or stay in – the market.

"Vacancy rates remain very low at about 1%, and this is giving investors added confidence," says Paul Smith, marketing director, Braxton Chase.

"The reason Melbourne remains so resilient are the demand and supply issues. Population continues to grow at a fast rate, with over 60,000 migrating to the city over the last financial year – more than any other capital city – and this trend is set to continue, mostly due to international immigration."

This strong population growth will be "one of the major drivers of capital growth and rental yield" in the medium term, he adds.

Colliers International research analyst David Grima believes Melbourne has strong foundations to deliver "prosperous growth in the future".

"It's anticipated that population growth within the City of Melbourne will exceed the rise in dwelling numbers from 2007 to 2010, which, along with extreme lows in vacancy rates, suggest that supply and demand have become closely aligned."

"In fact, the Melbourne residential apartment market may be in undersupply up until 2011, which is likely to further reduce vacancy rates and continue to place upward pressure on rental rates and median price growth."

Real Estate Institute of Victoria figures show that in properties situated in 'inner Melbourne' the rental vacancy rate has dropped to 25-year lows of, or below, 1%.

"Continued strong population growth, along with a slow-down in dwelling completions, has been the main driver of a general decline in Melbourne vacancy rates since 2002," Grima says.

"This represents unprecedented lows and indicates the strong demand for rental properties in Melbourne, particularly within inner Melbourne."

First homebuyers who have been "sitting on the fence" will be prompted to investigate their home ownership options following the FHOG boost, which will have an impact on the rental market, adds Janet Spencer, director of Buyer Solutions property consultancy in Melbourne.

"They now have $14,000 plus state initiatives to go towards their property purchase, and if they’re in the under $500,000 market that will offset the costs of stamp duty significantly," Spencer says.

Suburb spotlight: Brunswick
Situated several kilometres north of the Melbourne CBD, Brunswick is a multicultural suburb known for its rich mix of cafes, restaurants and shops. Residents of Brunswick have easy access to the CBD via regular train and tram services.

The European resident mix adds a cosmopolitan atmosphere to Sydney Road, which offers European and Middle Eastern dining, with flavours from all nationalities represented. Brunswick East is also home to a stretch of Lygon Street, the famous dining precinct that is anchored in Carlton but continues through to Brunswick, offering authentic restaurants, bars and entertainment venues, and a less crowded atmosphere.

According to 2006 Census results, roughly half of the dwellings in Brunswick are freestanding homes, with the remaining properties comprising townhouses, semi-detached houses and flats.

Apartment prices in Brunswick increased 4.1% in the three months to September 2008, and climbed a massive 16.2% in the 12 months to September, reports Residex.

The median apartment price is now $329,500, with an average rental return of $270 per week, or 4.27%.

The fundamentals for investment in the Brisbane property market remain strong, with the state economy growing on a number of levels and contributing to some of the highest levels of wage growth in the nation.

Despite an evident slow-down in sales activity and price growth, Brisbane is “yet to feel the brunt of the market decline", according to Paul Smith, marketing director of property research firm Braxton Chase. "If this was a city full of overvalued property, we’d be concerned, but it remains well valued."

"While some suburbs are showing more signs of a slow-down than others, investors are still wise to the areas where a lack of stock and strong yields can be found," says Smith.

A recent report by LandMark White Research revealed a significant shift in sentiment that has been evident regarding the Brisbane property market since the beginning of 2008. "Key fundamentals of the market including limited housing stock and land supply, record low unemployment and continued growth in population remain solid," the report states. "[However], other factors such as affordability, high interest rates, declining consumer sentiment and volatility in equities and credit markets have produced a greater impact on the overall market."

Yet Alison Timchur, Brisbane research analyst with Colliers International Research, believes that buyers will return to certain sectors of the market as property prices begin to show signs of growth, which will happen because supply is "still not keeping up with demand".

"The past five years have seen strong growth in the inner ring suburbs, due to continued high rise development and densification of the city and outer ring suburbs, which have lured buyers with promises of affordable property and large backyards," Timchur says.

"However, the current focus on urban renewal will see various fringe suburbs re-zoned for medium density development, and that will bring population growth and price growth to the middle ring suburbs."

Smith believes that residential real estate values will remain relatively stable in the short term "with a pick up in the market likely soon after".

Suburb spotlight: Magnetic Island
The small land-locked community of Magnetic Island, located 8km off the coast of Townsville in north Queensland, is poised for growth, says PRDnationwide Magnetic Island agent Di Smee, who believes that as Magnetic Island develops, prime waterfront properties "will only continue to gain value".

"The proximity of the island to a major regional CBD and airport make it extremely liveable," Smee says.

"Many people live on the island and commute to work each day, and many more island property owners are from southern cities like Melbourne or Sydney, because their tropical paradise is never more than 30 minutes to the airport."

More than 50% of the island, which is only accessible via a 20-minute ferry ride from Townsville's inner-city, is zoned national park, and less than 10% is able to be developed, Smee says.

This means there's a guarantee that development "won't overwhelm the area's natural beauty."

"The island has an international reputation as a tropical paradise, and the addition of a world-class harbour in recent years has attracted five-star developments that have lifted the island’s status even higher," she adds.

The ACT property market cooled during the second half of 2008, but that has been in line with the general slow-down experienced across all Australian cities, says Paul Powderly, ACT chief executive at Colliers International.

"The slowing has been as a result of uncertainty in the economy, and not due to any fundamental shift in the key drivers of the ACT market," Powderly explains.

"Employment is low, household income is strong and the market is in a supply/demand equilibrium, which is underpinning current price levels in the market."

Despite the general easing back of sales activity, property prices haven’t fallen significantly in Canberra, easing back less than 1% in the September quarter, and Powderly believes they'll remain steady in the short term.

"Recent announcements from the federal government will stimulate the market, and we expect sales volume to pick up in the first quarter of 2009," he says.

"We expect growth in well-located good quality investor stock as the market looks for security for their future nest-eggs," he adds.

The inner south markets that are producing stock suited to the investor profile will be the big winners over the next 12 months.

Derek Whitcombe, Canberra project marketing director for Colliers International, says the slowest sector of the Canberra market is in the $1,000,000–2,000,000 price range, as Baby Boomers are "sitting on their hands" while they wait to see what will happen to their investments in shares.

"Prior to the recent global crisis, this part of the market was leading the activity, especially in high-end apartment sales," he says. "It's expected that after a couple of months of rationalisation and acceptance, they'll return to the fold."

First homebuyer activity also started to improve "the very day after the government’s announcement in the increase in First Home Owner Grant," Whitcombe adds.

"Generally, it's expected that sales in the $300,000–750,000 price range will gradually improve until March 2009, by which time it’s expected that the market will rebound strongly across the board."

Suburb spotlight: Crace
Crace, located 2.5km southwest of the Gungahlin town centre and around 9km north of the CBD, will be Canberra's newest suburb.

It has been established to help meet a growing need for housing in the ACT, and will be developed over the next six years.

Project director Clare Gilligan says entry road works and the start of subdivision works in Crace have commenced, and the demonstration village and sales information office, along with the first stage sales release, are on track to open in May 2009.

"Our intention is to create a place that will buzz with activity and life, and where people want to be," Gilligan says.

"The urban core has been inspired by successful urban places such as Leichhardt and Surry Hills in Sydney, and quality, architecturally designed residences will establish the suburb’s character," she explains.

Once complete, Crace will provide upwards of 1,400 new homes, including a mix of high-density, inner-city-style housing options – many of which will be available for less than $300,000.

The investment fundamentals in Adelaide are positive, with economic activity increasing due to the various major mining projects, including Olympic Dam and Prominent Hill.

And although a slow-down has been evident in terms of sales activity, the recent sharp fall in interest rates and the increased FHOG incentive will lead both investors and first-time buyers into the market, according to Paul Smith, marketing director of property research group Braxton Chase.

"It's difficult to get a consistent view of Adelaide’s residential property market," Smith admits.

"Last year, it was just behind Brisbane as the country’s best performer, and now some commentators are failing to see the excellent underlying fundamentals in the market."

Although consumer confidence has been dented by local, national and global factors – which have "manifested themselves in higher costs, lower affordability and share market volatility beyond anything most would have ever seen" – good prices are still being achieved, Smith says.

"Canny investors are spotting the intrinsic value combined with the ever-increasing yields, the latter being due to record low vacancy rates of 1.5% on average," he says.

Great value can be found in SA's regional markets, says Robin Turner, president of the Real Estate Institute of SA.

"Rural economies have started to strengthen after some much needed rain this winter which has boosted confidence in the regional market," Turner says.

"The sales volume is down on this time last year, but the strength in pricing shows confidence in the regional housing market."

Both investors and owner-occupiers are attracted to country SA's "affordability and good long-term prospects", Turner adds, and younger people in particular are also relocating to country areas, chasing the burgeoning employment options.

The doubling of the FHOG will also have a huge impact in Adelaide, where the median house price is the second lowest of all capital cities in the country, behind only Hobart.

"There's no doubt this injection will see more buyers enter the market," Turner concludes.

Suburb spotlight: Middleton
Centrally situated between Goolwa and Port Elliot in the Alexandrina district, Middleton is a beachside suburb that offers kilometres of scenic, accessible coastlines and surfing beaches.

The coastal community is located approximately 65km south of the Adelaide CBD, and is convenient to local wine regions, water activities and, between June and September, whale watching expeditions.

House values increased 4.8% in the September quarter, reports Residex, lifting the median price to $378,000. Capital growth in the year to September was substantial at 18.3%, more than double the rate of growth for regional SA across the same period.

Alexandrina City Council mayor Kym McHugh says the council is committed to supporting new projects needed for the growing community, including $1.5m for stage two upgrades to Airport Road, Middleton, and more than $2.2m on other upgrades and conservation projects throughout the region.

The Perth property market has cooled in recent months, with unit values dropping 1.51% in the three months to September 2008, while house prices remained flat, reports Residex.

Real Estate Institute of Western Australia president Rob Druitt believes the local market will begin to lift when the Reserve Bank of Australia’s recent interest rate cuts begin to flow through to consumers, particularly now that first homebuyers have access to more federal grant funding.

"With our state's population growing at around 1,000 people per week, there's a lot of pent-up demand in the system from people wanting to buy, but waiting for the right signals to move," Druitt says.

The doubling of the FHOG is set to spark interest from those people that are "currently in that hesitant position", while recent mortgage interest rate cuts will generate activity from investors.

"Now that house prices have corrected after the boom, interest rates have fallen and the number of homes on the market has swelled, it's reasonable to expect that many first-time and upgrade buyers will emerge," Druitt says.

The state government's 15% cut in stamp duty costs will also add stimulus to the market, adds Paul Smith, marketing director at Braxton Chase.

"The state economy continues to move from strength to strength, and much of the budget surplus is being used to fund new infrastructure from roads to hospitals and educational facilities," he says. "This will, in turn, benefit the residential markets – just don't expect the effects to happen quickly."

House and land sales that have decreased "to the lowest level in more than a decade" don't bode well for a quick turnaround in the short term, but Smith says none of the fundamentals of the Perth property market "suggest the need for panic selling".

"The best case scenario for the Perth residential market as a whole is that values will remain flat or on par with inflation," he says. "The reality, however, is a downward market in the short term," he adds.

Suburb spotlight: Boddington
Located on the Hotham River roughly 125km southeast of Perth, the township of Boddington represents rural living at its best.

The quiet town, named after local shepherd Henry Boddington, has been revitalised with the new $2.4bn Boddington Gold Mine (BGM) operation. The original Boddington Gold Mine was established in 1986, and the new mine has been created over its footprint.

The operation involves open cut mining from two large pits, and is expected to produce an average of 850,000 ounces of gold and 30,000 tonnes of copper every year for the next 20 years, commencing early 2009.

During operation, the project will inject an estimated $550m per year to the Peel economy, and $770m per year into WA.

House prices in Boddington have increased 9.93% in the three months to September and 32.42% in the 12 months to September, which reflects the need to accommodate the mine’s 2,000 employees during construction, and 650 permanent employees throughout operation.

The median rental return is $310, according to Residex, which equates to a yield of 3.34% on the median value of $483,500.