demand for residential property will be slower in 2008 than the...

demand for residential property will be slower in 2008 than the previous 3-4 years due to higher rates......simple as that.

however, demand for new housing is affected first.

Population growth in 2008 of 160,000 immigrants will continue the demand for housing.

continued job growth, wage increases and tax cuts will keep house prices higher or at worst closer to inflation levels.

Supply remains well below the requirement in most states and strong rental growth will lift yields for investors.

Retails spending slows as people become nervous due to interest rate rises and media speculation.

Banks lose market ground again due to nervous shareholders however banks, although writing off some overseas loans as bad debt......will still make billions and would have to be considered a buy.

good properties in good locations will continue to do weel, with perhaps the second or third tiered property market not fairing as well over 2008.

As rates come down in 2009 (clearly shown on any banks rate forecast loan curve) due to a slow in the housing market and retails spending as evident in the latest figures.

This will slow inflation levels which will in turn allow the RBA to start to drop rates as early as late 2008 or early 2009.

This will drive prices for houses higher with a second affect being even higher rents due to the above being higher immigration,and less new houses being built, as well as those that sold when rates were high and will try to rebuy as rates come down.

Stockmarket is flat? many reasons but the sharemarket is mainly built on smoke and mirrors as well as media speculation so a 20% drop is no big deal.

Subprime has some affect on non bank lenders securing funds on market to service their new clients which drives the small lenders out of the market and stops the highly geared borrowers from entering the market on high rates.....which actually helps the market, not hinder it.

Housing market is immune for reasons given above.