Our annual year-ahead round table, led by Financial Review Smart Investor editor Nicole Pedersen-McKinnon, recently sought determine just what’s in store for the coming financial year – and what an individual investor should do about it. Here’s what the round table said about property.

Participants:

■ Craig James, chief equities economist, CommSec

■ Riccardo Briganti, head of research, Macquarie Private Wealth

■ Matthew Drennan, executive GM investments, Zurich Financial Services

Si: We’ve seen the slowest quarterly property market in 12 years and our own research indicates at least 141 suburbs will fall in real terms in the year ahead. What’s the outlook for residential property?

Craig James: Supply and demand basically moving into balance. We’re not seeing as many dwellings approved; provided the Reserve Bank doesn’t go silly in terms of lifting interest rates, we should see demand recover.

We’ll have something in the order of 180,000 new migrants coming into the country. We’re underinvesting in some states – NSW and Queensland – while the other states seem to be a fair balance. So I think, this year, little or no growth. I think next year something probably in the order of 5 per cent.

Riccardo Briganti: The focus has been on whether there’s going to be a big fall in house prices as was seen in overseas markets. I think that’s overdone.

What may happen though is that you get a very long period where house prices just go sideways, like in the early 1990s for about five years. That has the same impact in the end because if wages are increasing, then the ability to buy property in five years’ time is increased.

Si: So it does address the huge affordability problem. Matt, are the fundamentals strong?

Matthew Drennan: They’re not bad. Immigration is the strongest piece for Australia and probably one of the big differentiators compared with a lot of other jurisdictions.

The relative expensiveness of domestic property based on a ratio to disposable income is very high. But because we have that demand coming through and because wages are generally OK, because the economy is growing pretty well and you’re not faced with massive unemployment like in the US, I agree you’re not likely to see massive falls in property prices in Australia. But there’ll be much less upside than what we’re used to.

There’s a bit of a patchwork-quilt element here, too, though. A lot of the discretionary housing, if you like – holiday houses in Noosa and units and so on – they’ve really taken a beating. But well-located property within an easy drive to the central business district in the major cities isn’t going to suffer any great falls.