The short answer is no, according to the experts, but property investors shouldn’t expect any miraculous growth spurts over the next twelve months.
It’s easy for a property investor to feel anxious at the moment. Wherever you turn, you’ll find yet another newspaper, magazine or TV news bulletin churning out a different story about property prices – and the news is often overwhelmingly negative.
Once you strip away the sensational headlines and look at the raw facts, however, it’s clear that property values across the country are stable, and any declines that are forecast will be relatively minor.
National house prices are likely to decline around 0.5% over the next 12 months, according to a countrywide survey by National Australia Bank. The NAB poll of 237 real estate agents, developers, asset managers and property owners backed the stance of ANZ bank, which also recently predicted a flat outlook for 2011.
On a home worth $400,000, a property price decline of 0.5% translates to just $2,000, which is barely enough to lose sleep over. And for savvy investors, there’s no time like the present to snap up good quality properties for a reasonable price.
"I think this is, in some ways, the year property investors have been waiting for,” says Monique Sasson Wakelin, managing director of Wakelin Property Advisory.
“What people don't understand is that they should be catching the wave right now. The opportunity is here for investors who are smart and can get into the market when things are quieter."
Let’s look at the other positive news for mortgage holders. The consumer price index rose a modest 0.4% in the last quarter of 2010, and the underlying inflation rate sank to its lowest in 10 years. These benign inflation figures suggest that the Reserve Bank will have little cause to lift rates any time soon.
"This sudden easing in inflationary pressures will keep policy on hold for the first half of the year," predicts Westpac chief economist Bill Evans. Adds AMP Capital chief economist Shane Oliver, "We expect interest rates to remain on hold out to May at least."
This means investors can expect their ongoing mortgage costs to remain stable, while rents continue to surge as demand for rentals stays strong. As it turns out, property investors aren’t in too bad a position after all.