That may prove slightly optimistic. However, despite some gloomy predictions at the time, few experts believe that a serious negative equity problem is likely.
Despite the rises since 2001, interest rates remain low by historic standards. Wages look set to continue their upward spiral and net immigration is also set to continue. Estimates are that 200,000 new workers will be required over the next 5 years to service the economic expansion predicted.
These factors are likely to continue to provide upward pressure on house prices.
On the other hand, the supply of development land is being boosted by the reduction in capital gains tax to 20% and Bacon III contains strong proposals to penalise developers and landowners who own zoned and serviced land but are not actively seeking to build on it. Bacon also recommended Special Development Zones speeding up the Planning Approvals process in certain areas. At the same time, the output of the building industry showed worrying signs of decline in 2001 though it seems to have stabilised since then.
Figures suggest some further slowing in the pace of increase in house prices with small declines in some areas, though generally not in the first time buyer end of the market. The Government is obviously concerned about the negative impact the difficulties in the housing market is having on voters. At the same time however, they are aware that the only thing worse than a strongly rising housing market is a declining one and the attendant perils of negative equity, so they must tread carefully!
In the commercial sector, the economic hiccups of 2001 undoubtedly had a negative impact on demand, but provided we don't spiral into recession, and nobody is predicting that, this is not likely to be major. Indeed, the events of 2001, the shakeout of stockmarkets since 2002 and subsequent world unrest make property look like a relatively safe bet for long term investors. Therefore, steady performance from this sector is in prospect.
Strong demand from urban dwellers, farmers, developers, forestry interests and investors, coupled with the historically low level of land available for sale is almost certain to see a further increase in land values. Farmers looking to replace land compulsorily acquired for the massive ongoing roads program will provide an underpinning influence in the agricultural land market over the next few years.