What does 2015 have in store for property prices?

The next 12 months is likely to lead to a slowdown in property prices throughout the country, Fitch Rating’s latest Global Housing and Mortgage Outlook reveals. It predicts that while house prices will come down in 2015, this won’t deter people from securing property investment loans.

In fact, demand for these mortgage products is expected to be higher than ever, with 50 per cent of all home lending for the year likely to be granted to investors. However, they have to be prepared for the possibility of rental yields dropping to under 3.5 per cent, which is what Fitch Ratings believes will be the case in 2015.

Investors who have decided that property is the right place to put their money this year will no doubt be weighing up which locations will offer the best returns. If Fitch Ratings’ predictions are anything to go by, Sydney and Melbourne could see disappointing results as increases dip to between 3 and 4 per cent. Perth, on the other hand, is forecast to see its price rises flatten.

However, if investors choose to look at historical data rather than speculation, they may find that Sydney and Melbourne provide the strongest growth potential. Capital city home values were found to be up 7.9 per cent in 2014, the latest CoreLogic RP Data Home Value Index reveals, although these two locations outperformed the rest of the pack.

Sydney’s home values were up 12.4 per cent over the course of the year, while Melbourne was the only other area to have registered an increase that exceeded 5 per cent. The Victorian capital’s properties appreciated 7.6 per cent over the 12-month period.

It’s therefore essential to weigh up what the market has to offer before applying for any property investment loan.