The real estate news has not been great for people who want to own property.

It’s going to be an interesting six months: the consensus in Canberra seems to be that we are in the grips of a housing bubble and the only way to bring house prices down is to raise interest rates.

The latest figures from the HIA-CBA housing affordability index show that while affordability improved by 3.6 percent in the September quarter, it was from a base of much worse housing affordability figures.

However, with interest rates comparatively high, and with rates due to rise again, at some point house prices will fall and affordability will improve again.

It’s going to be an interesting six months: the consensus in Canberra seems to be that we are in the grips of a housing bubble and the only way to bring house prices down is to raise interest rates.

There is nothing the average home buyer can do about this: the Reserve Bank will set the interest rates and the banks will pass on the costs.

They’ll do this to tame inflation.
While this situation is working itself out, you have to keep your eyes open for opportunities.

Currently house prices are flat: according to Rismark and RP Data, Australian capital city house prices (unadjusted) were at
0.0 percent growth in the September quarter. They’ve been this way since May.

But while house prices in Sydney and other capital cities have been flat, there are three areas buyers could be looking in.

Firstly, outside the city. Rismark’s unadjusted figures show a decline of
2.4 percent in house prices outside the capitals and this trend has not increased since December 2009.

Secondly, if you don’t want to pursue opportunities in non-metro areas, look at some of the low-performing suburbs in Sydney.

The 20 percent most expensive (capital city) suburbs in Australia had fallen 1.7 percent since the end of May, but they rose again in September with capital gains of 0.4 percent.

At the same time, the cheapest 20 percent of suburbs in capital cities fell
0.4 percent in value.

These opportunities may not be the Dream, but they do offer a way into the property market, especially if you plan to buy a rental property.

And rental properties are doing okay across Australia with gross apartment yields of 4.9 percent in September, and yields on houses steady at 4.0 percent.

Again, have a look at the data and see where rentals are strongest: the highest yielding apartments in September were in Darwin
(5.7 percent), Canberra (5.3 percent) Sydney
(5.0 percent) and Brisbane (5.0 percent).

In Melbourne (4.1 percent) and Perth
(4.4 percent), you might not be interested.

These are just some observations of property in an uncertain market.

Your job is to get out there, become informed and find the opportunities. There’ll be a lot of them in 2011.

Mark Bouris is the Executive Chairman of Yellow Brick Road www.ybr.com.au

To ask Mark a question email: mark.neos@ybr.com.au