year and now that's according to the Global Housing and Mortgage Outlook report. It still

lists Australian home as the third most expensive of 22 countries surveyed. Here with us now

is Ben Kingsley, the Chief Executive of Empower Wealth from Melbourne. Ben, good morning.

Ben: Good Morning

Eliza: What is your take on the property market for 2015 in Australia?

Ben: Yeah, Eliza, what we got to realise is the property market in Australia is made up

of sub-markets. It is such a large population base where we are growing, the population

is growing. The economy is softening but we got to look at different markets, they are

in different cycles. So, when we look at Sydney, we do believe that the pace of growth is going

to slow, so there would be more growth in that particular market. But what we are actually

seeing is really good signs around planning approvals. Those planning approvals are going

to mean that there is going to be more stock that comes onto the market. From a supply

and demand point of view, we are going to see that supply kick in and from the demand

side, we are actually seeing immigration slowing. So population growth is slowing. So we believe

that combining potentially a slowing general economy, is going to soften the demand for

property and we will those price start to slow down. Certainly in Melbourne and Sydney.

On the other side, we've got Brisbane, which is a market place that is still in its upward

cycle so we suspect that Brisbane is going to do quite well in 2015.

Oscar: Now, you talked about the supply side of things and in your city, Melbourne, I think

it is well known that apartment buildings are popping up every second day it seems particularly

because of those investors from both overseas and locally. Now, will we see the price drop

as a result of this supply? I mean, you said that it will turn towards that but we have

seen prices go up in spite of these buildings popping up.

Ben: Yeah, but its early days. We are talking about upwards of 200,000 planning approvals.

Now, we've never seen those sorts of numbers. What usually happens in this type of cycles

in Melbourne, Sydney and Brisbane alike is that we start to see confidence around building

because we are seeing sentiments around property quite strong. We are seeing investors coming

into the market. So there is this lag effect where this building takes place in late 2015

and it become occupied in 2016. That is why we see with low interest rates at the moment,

we are actually going to see property prices continue to grow but I suspect some of that

gain will be given back in 2016 when interest rates start to rise.

Eliza: Ok, so let's look at it from the perspective of sellers and buyers. I suppose, first the

buyers, if you are out in this market, how should you approach it?

Ben: Look, very cautiously in 2015. We don't want to have the herd mentality and think

that we are going to miss out so we pay a premium to pay to get into a property, whether

we are buying for owner occupied purposes or even for investment purposes. There is

going to be a big supply of units that are going to come into the market but certainly

at those inner city areas and fully developed areas where housing stocks are at a shortage,

there will still be a really strong demand. So be sensible from an owner occupied point

of view, take a long term view. Say to yourself that this is something that we are going to

need to afford today and certainly tomorrow. And when we are talking about green fields

and new estates, there is an excitement in that particular market place. So we want to

say to people, be cautious out there, do your research, make sure that you understand the

supply that is coming along because if it is going to be oversupply then technically,

we are going to see flat values in those marketplaces in 2016 and 2017.

Oscar: Now, Ben Kingsley, you mentioned interest rates there and as we know, 3 of the 4 major

banks are predicting that the current record low cash rate of 2.5% is probably going to

go down even further. Won't that mean a rising prices as more people get into the market

and more people take on mortgages?

Ben: It's a great question Oscar and I think the important point here is that is not necessarily

going to be the case because what the Finch Rating Report also talked about was what we

called an affordability ceiling and that is a measure of household incomes with the ability

to be able to borrow. So if the cash rate actually comes down and interest rate goes

lower, the lenders aren't actually adjusting their assessment rates which means that borrowers

can't borrow more. So we are actually going to hit an affordability ceiling which means

that it won't necessarily put pressure on house prices. But in saying that, APRA and

the Board has got a real responsibility in making sure that we don't see the pricing

of house prices going too far because that could be going into a housing bubble realm

and we don't want that at all.

Eliza: On the housing bubble point, are there pockets and we see particularly in Sydney,

the market is really coming back very strongly. Are you at all concern about that?

Ben: Not yet. I don't think we are at that stage. You know, the banks do stress testing

on their mortgage books all the time and arrears rates are around 1% - 1.5%, at historical

low level. So I don't see any challenges there but I certainly wouldn't want to see double

digit growth in the Sydney property market in 2015. I suspect we are going to see that

single digit growth rate and I think we will see that in Melbourne. I do suspect double

growth rates in Brisbane and I suspect also, Adelaide is going to have an interesting time

and Perth, unfortunately, with the mining boom, it is probably going to be stagnant.

Canberra is also going to be another market that I think is going to be quite soft.

Oscar: Ok, Ben Kingsley, we will have to leave it there but thank you again for your insights.

Ben: Thank you very much.