Many property fanatics are proclaiming 2009 as the best year in decades to buy a new home. But others vehemently disagree, arguing that house prices are due for a sharp correction.
At the beginning of 2008, 68.9 per cent of respondents for the Mortgage and Finance Association of Australia/Bankwest Home Finance Index believe property prices would rise in the coming quarter.
The latest figures, out this week, show only 14.6 per cent of respondents retained this optimism in the first three months of 2009, with 60 per cent believing we're heading for a decline in property values.
Can 60 per cent of Australians be wrong?
Many property experts say: yes.
They say Sydney's 50 best suburbs will continue to enjoy sustained growth, while other areas will see flat to mild growth. But those forecasts come with clear caveats.
Residex property analyst John Edwards said the biggest factor weighing on property prices is unemployment.
Currently sitting at 4.4 per cent, unemployment has been tipped to rise as high as eight per cent in 2009 as the global financial crisis starts to hit home.
If those levels of unemployment become reality, house prices could slide.
"The key to what happens in western Sydney is employment," Mr Edwards said. "If unemployment doesn't rise significantly, then those suburbs will have already bottomed out.
"The areas that are in close proximity to industry/manufacturing areas or small business - probably have some more suffering to do."
Despite job uncertainty, Mr Edwards is positive on house values in Sydney.
He's an analyst who swears by a simple motto: "As long as you pay the right price for property, it's never the wrong time to buy."
"In every year, no matter what, there will be areas of the city that will grow well and there will be, even in boom times, areas that do fairly poorly," Mr Edwards said.
"So it's not the wrong time to buy property in Sydney; in fact, it's a good time, because now is the time when you're going to find bargains.
"If you've selected properly and in the right areas, you won't see a fall in value. They may stagnate, but not fall."
Others, however, dismiss such optimism as naive. Mr Edwards' argument certainly doesn't sit well with notorious bears Steve Keen and Gerard Minack.
Both men - a professor at Western Sydney University and a Morgan Stanley economist, respectively - have predicted the sky to collapse on housing prices.
Their conservative estimate is an across-the-board fall of 30 per cent.
But Shane Oliver, chief economist at AMP Capital, says the severe downturn in housing construction - marked by a whopping 34 per cent fall in residential building approvals in 2008 - should ensure any falls aren't quite so steep.
"I've been forecasting 10 per cent falls throughout the year," Mr Oliver said.
"I don't think we're going to see the 30 to 40 per cent falls some have been predicting, because Australia isn't going into a depression and we have an under-supply of housing in Australia.
"Interest rates have made a mortgage more affordable, and the first-home buyers' grant is helping, but the flipside is that unemployment has only just begun to rise and the rise will be substantial. Normally, when unemployment rises, it puts a big dampener on the housing market."
Oliver says the period of high unemployment during the 1990s put significant downward pressure on housing prices.
Frighteningly, he now predicts 2009 will bring even bigger decreases because the household debt, relative to income levels, is now four times higher than in the 1990s.
Property guru John McGrath is, predictably, much more bullish.
By Mr McGrath's own admission, asking a real-estate agent whether it's a good time to buy is akin to asking your barber whether you need a haircut.
So it's perhaps no surprise to hear him utter the phrase "best buying opportunities for almost 20 years".
In his synopsis of the summer of 2008-09, McGrath believes there will be a fundamental shift in the psychology of buyers - many of whom, he believes, are sitting on the sidelines, waiting for the hammer to come down on a dire 2008.
"Economic uncertainty has caused a decline in consumer confidence," he said.
"In the past 12 months, the average days-on-market in the Sydney metro region has increased from 40 to 60 days.
"This indicates that buyer psychology is changing, as they have a more considered approach to transactions. But I believe this buyer sentiment will shift in coming months, as property once again becomes the preferred asset to creating wealth."
Mr McGrath believes straying too far from the CBD heightens risk.
"For buyers, there will continue to be a flight to quality, so don't stray far from the top 50 suburbs of Sydney, most of which are located on the coastal belt or within 15km ofm the CBD," he said.
There are, without doubt, risks to house prices. They are more expensive, relative to incomes, than in Britain and the US, and British prices have fallen, despite a massive under-supply of properties and huge demand - so it's possible for house prices to fall, even if there's demand for properties.
Mr Minack believes there's another problem: "There's huge demand for Rolls-Royces, too, but most people can't afford them. Demand is no good if prices are too high."
