Just over 35 per cent of Australians expect property prices to rise in the coming quarter – down from 80 per cent this time last year.
According to the latest Bankwest/Mortgage and Finance Association Home Finance Index, Victorians are the most optimistic about property prices, with 46 percent anticipating higher prices.
The Index also revealed that consumers are still wary of higher interest rates, with 85 per cent of respondents stating rates will rise again this year.
Bankwest head of specialist banking Ian Rakhit said Australians are more pessimistic of capital growth and will start 2011 expecting steadier rather than rising prices.
“Part of this is clearly driven by their expectations of higher interest rates in 2011,” he said.
But while rising rates and immediate flat growth may stop some first home buyers from getting on the property ladder, a large number of investors agree that now is a good time to buy.
The Index found that 77 per cent of investors see it is a good time to purchase an investment property.
"Despite a few cash rate rises throughout 2010, there are encouraging signs for investors in the property market. Rents have increased and vacancy rates are low. These are the type of signals investors look for in their property decisions,” MFAA chief executive Phil Naylor said.
“We are seeing savvy investors come back into the market as a long term investment strategy that’s underpinned by expectations of income growth.”
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