Extract from the September Residex newsletter There’s been a lot of negative attention being given to the current state of the housing market with commentators suggesting property prices might fall to well below those reached before the ’boom’ began nationally. I suppose what you choose to believe depends on what branch of the tree you’re currently sitting on. To me I think these commentators like to throw these tid-bits of fear into the market place because it works for them, it helps to sell their wares and stir up a frenzy. I’m more pragmatic. Yes I said some time ago that the market might be looking at a once in 100 year event, however since the RBA’s moves to cut interest rates I’m less inclined to think that and believe the RBA has acted to manufacture a soft landing. I don’t think the housing market is going to collapse as it has in the USA, nor do I think you will see prices falling away to the levels these commentators suggest. But don’t call me an optimist, I’m a pragmatist, and the latest Residex statistics in fact show there’s still money to be made in the market. These figures show that generally, while property sales are down, the values are not falling away significantly. Yes the capital growth might have slowed to the point of zero or a little less, but the market is still relatively stable. As these stats show, we have seen in the last three months a very significant slow down in the capital growth rates of properties, both houses and units, across the country. For the last two years most capital cities have witnessed capital growth rates jumping leaps and bounds. Adelaide, Brisbane, Darwin and Melbourne and Perth have averaged double digit growth which was simply unsustainable. Similarly, the growth rates of every regional market across the country have also sky-rocketed with an average showing double digits over the last ten years. The only exception to this double digit growth has been Sydney and regional New South Wales. However, although capital growth rates have generally had much smaller percentage increases, property prices in Sydney as well as the New South Wales regionals are higher than their counterparts in other states which suggest any increase in capital growth expressed as a percentage is generally worth slightly more in dollar figures than the other capital cities and regional areas. These statistics show that this is not anywhere near a collapse in property values, it’s the market positioning itself for a soft landing. While property sales have fallen away sharply and capital growth stagnated, rental returns are still performing well. The difficulty however lies in finding the better investment opportunities. This is especially the case given the housing affordability problems making it more difficult for investors to purchase additional properties.