What will happen to property this year? Most observers are forecasting that while house prices will continue to rise in key areas such as Sydney and Melbourne, apartment prices will fall, and perhaps fall substantially.

It would seem that the building boom of the last five years has created an oversupply, with some forecasters claiming prices could fall as much as 20 percent in markets such as Brisbane, and even in Melbourne.

House prices, however, are likely to be more solid. Demand is still strong in cities with expanding populations – Melbourne and Sydney – but agents are reporting a lack of supply.

AMP chief economist Shane Oliver, for example, believes house prices  – on a national basis – could climb about 4 percent this year.

His forecast for the apartment market is for a 2 percent fall across the country, but says there could be falls of up to 15 to 20 percent in oversupplied areas up to 2018.

In this multi-speed market, geography is also a factor. While Melbourne and Sydney will continue to lead the market, other cities such as Perth, Brisbane and Adelaide are unlikely to deliver much in the way of capital gains.

So, with those caveats and in that context, here are some ideas on property investment in 2017, tailored for particular demographics.

• Young Homebuyers. There’s been so much written about this group, and how they have been locked out of the market by the rising prices. Could 2017 be a year of opportunity? If apartments really do slump by 20 percent in some markets, could this be a chance to get on the property ladder. Another suggestion is to look outside capital cities at growing regional cities. Newcastle in NSW, for example, offers greater affordability and attractive long term growth prospects.

• Empty Nesters. You’re in the family home and its full of unused bedrooms vacated by the children. Retirement is only a few years away. Given that the market may have reached a plateau, is it time to have a think about selling the family home now and downsizing now rather than later? Perhaps you are not looking at the large – and tax free – capital gains continuing to roll on this year. Perhaps the timing is right to sell.

• Investors. So, you’ve got the mortgage on your family home under control, and want to get into the market as an investor. This is the time when the equity you have built up in your own home can really start working for you. With interest rates low and your home at its maximum value, your ability to borrow is better than it has ever been. Banks will likely be lining up to throw money your way. This means you can shop around for the best mortgage deal, full of honeymoon provisions and at the lowest rates. Be careful not to overborrow, however, as rates might firm later in the year. Where to buy? Do your homework but make sure you don’t overpay, and try and pick an up and coming area which is still relatively undiscovered. Be aware, however, that rental yields have declined as prices have increased. It may not be a great year for buying and flipping a house for a quick profit, but it could be a good on for getting set for the long haul.

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