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CONSUMERS are shrugging off dire predictions from the Reserve Bank about property and returning to the market to buy new homes for both themselves and for investment.
The Westpac Bank/Melbourne Institute consumer sentiment survey has found that an increasing number of people think now is a good time to buy property, confounding the Reserve's outlook.
And an Australian Bureau of Statistics report shows banks and other lenders have been increasing their property related loans for three months.
The average size of loans for owner-occupiers hit a record $201,800.
Reserve Bank governor Ian Macfarlane quoted real estate agents, saying "new investors have vanished from the market". He also forecast further price falls, saying owner-occupiers now felt they could wait, while investors faced no prospect of capital gain.
However, the consumer sentiment survey showed a 29 per cent increase in the number of people who think now is a good time to buy a dwelling. This followed a 17 per cent rise in the previous three months.
Louis Christopher, research director for Australian Property Monitors, said the latest approvals figures showed that comfort about interest rates, and a belief that prices had already fallen, was bringing out the bargain hunters.
He said the approvals showed Australia was not about to have a property crash.
"There is a high correlation with employment and property prices, and employment growth has held its ground."
But he said Australians were highly sensitive to interest rates.
The Reserve Bank is likely to raise rates further unless overall credit growth starts to reduce.
Financial advisers were inclined to agree with Mr Mafarlane that now was not a good time to be entering the property market as an investor. "There has always been a public perception by people who aren't that investment savvy that bricks and mortar are a safe place to invest," said Damian Cullenn principal of Cullen Financial Planning.
He said the property market was likely to undergo a long slide over a three or four-year period, similar to that suffered by the share market after 2000.
Stacey Martin, financial planner with National Private, noted rental returns were typically 2 to 3 per cent, while interest rates were 6 to 7 per cent. She said people entering the market now would need a very long-term view to. expect any advantage.