Leading real estate group Raine & Horne is predicting that real estate values in Sydney and Perth will rise by between 3% and 5% in 2012, while values in Brisbane will stabilise for the first time in four years.
"With Europe still in economic turmoil and an expected hike in unemployment, this will put the Reserve Bank of Australia under significant pressure to reduce rates when it meets again in February," says Angus Raine, CEO, Raine & Horne.
"In Sydney, the market between $400,000 and $650,000 will continue to show positive signs in 2012, with investors re-entering the market, replacing the expected shortfall of first home buyers due to the end of the stamp duty concessions on existing homes."
Mr Raine adds, "It's a misnomer that real estate investing is only about location, location, location.
"Price, price, price will drive the buying decisions of those owner-occupiers and investors considering homes in Sydney below $650,000 next year.
"As such, it's also fair to expect that traditional apartment markets, where investors compete with first home buyers, such as Eastwood, Ashfield/Burwood, Hurstville and Dee Why, will show plenty of form in 2012."
Away from the city and the Raine & Horne CEO expects regional centres with decent facilities for green and sea changers will enjoy some capital growth.
"Baby boomers will look to regional centres that not only have excellent health and lifestyle facilities, but also to towns such as Tamworth, Orange and Port Macquarie, which have airports that make it easier for friends and families to visit," says Mr Raine.
In some parts of Brisbane, the real estate market has bottomed and is showing signs of recovery on the back of the double helping of interest rate cuts in November and December. "It's fair to say that 2012 will be the first time in a number of years that Brisbane real estate values won't fall," says Sean Green, Operations Manager, Raine & Horne. "Indeed savvy investors seem to be leading the way with inner ring suburbs such as Fairfield and New Farm already in their sights."
Raine & Horne is also predicting 5% growth for Perth suburbs such as Cannington, which has relatively easy access to Curtin University of Technology and the Kwinana Freeway, as well as affordable Kenwick and Kelmscott in the south east.
"We also expect to see more investors in the North Perth market in 2012," says Mr Green.
Breakout: 2012 real estate watch
NSW - Traditional Sydney apartment markets - Eastwood, Ashfield/Burwood, Dee Why as well as inner ring localities such as Bondi, Newtown and Neutral Bay. Also transport hub towns with airports like Tamworth, Bathurst, Orange and Port Macquarie will attract renewed baby boomer interest.
Queensland - Inner ring Brisbane suburbs such as New Farm and Fairfield will enjoy renewed investor interest, while the Noosa Hinterland is a real estate market to watch as green changers continue to move to the region.
Western Australia - Affordable Kenwick and Kelmscott in Perth's south east and Cannington in the south will be suburbs to watch in 2012, while North Perth will benefit from renewed investor interest.