We’re now at the beginning of a long period of economic recovery. One of the worst global financial crisis we’ve ever seen is finally losing steam and global markets are definitely stabilising.

Australian RBA Governor Glenn Stevens says this may turn out to be a shallower recession than first feared but risks remain, so caution is recommended.

The GFC’s impact on local real estate has been far less than equities and that’s great news for investors and homeowners. However, we face some challenges ahead as the First Home Owners Boost (FHOB) winds down and unemployment and interest rates inevitably go up. (Although unemployment is now expected to peak well below original expectations of 8.5 per cent.)

In 2010, all three of these eventualities may dilute demand in the property market, although returning investors will definitely create some balance. In the meantime, price growth in the remaining months of 2009 will continue steadily with spring likely to be an active period.

I believe September will be an extraordinary month as first homebuyers compete even more fiercely to secure the FHOB in full before it halves in value on 1 October and expires on 31 December.

The FHOB has been a highly successful stimulus initiative with more than 100,000 young people achieving the Great Australian Dream of home ownership since it was introduced late last year. The FHOB and resulting activity has directly benefited the broader economy and it’s fantastic to see so many young Australians enjoying the thrill and long-term security of home ownership.

Softer prices at the top end will continue to provide incredible buying opportunities in our best waterfront suburbs this spring. However, an upper end recovery is well underway across the country as new money flows in from upgraders, investors and ex-pats. It’s definitely time to buy.

We may also see more first home sellers trying to cash in on the first home buyer demand by selling their existing properties in the sub-$500,000 bracket this spring. They’re likely to achieve top prices, but buying back in may take time with a severe shortage of stock under $1M.

Australia has performed remarkably well during the GFC and our comparative resilience has definitely been noticed around the world. We’re one of the few first world economies to dodge a technical recession and we’re increasingly being seen as a safe haven for investment. After everything that’s happened, real estate is being seen as the safest haven of all.

As always, confidence is key. If both the global and local economies continue to stabilise, consumers will continue to feel confident. Investors will be a very important factor and a driving force in the property market in 2010 given so many people are now ready to re-invest.

However, it is crucial that buyers and sellers keep their mortgage debts manageable. We now have a clear indication from the RBA that a collective two per cent rate rise over the next 18 months is likely. Today’s three per cent cash rate, the lowest for 40 years, is an emergency measure that will be lifted once the eye of the GFC storm has passed. If you’re buying or re-financing today, factor this in.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.