The inner west suburb of Abbotsford has been named as one of the state's best performing housing markets.
According to John McGrath’s latest Market Review, affordability remains a key issue for buyers.
People are less confident about taking on large amounts of debt and, as such, Mr McGrath said there is increasing competition for the more affordable homes.
While demand for property has waned a little in the last 12 months, Mr McGrath said the markets identified are at the beginning of a long-term growth cycle.
“Property remains an excellent asset class for long-term investment and definitely offers more stability than the volatile share market,” he said.
“Once confidence returns, Australia will be in good shape. Unemployment remains relatively low and rents are very strong. A key factor is interest rates. If the RBA moves to decrease rates further, this will supersede many macro economic issues for the average buyer.
"Buyers have been concerned about interest rates moving upwards and we really need to see a rate reduction that puts the steep rises of the past 18 months behind us. With three year fixed rates now below the variable, this indicates the banks’ belief that interest rates are on the way down."