It’s usually investors and foreigners who take turns in the role of housing sector bogeyman but lately they’ve teamed up.

Yet foreign investors don’t make that much difference to home prices except for off-the-plan apartments. As Rob Mellor, head of property research and economic group BIS Shrapnel points out, even if there were 20,000 mainland Chinese flouting the foreign investment rules – foreigners can’t buy established dwellings – that would still only represent 1 or 2 per cent of turnover.

Home-grown, as it were, investors are also getting a bum rap, from the Reserve Bank of all places. Perhaps if it hopped on a plane to Perth it might not be so worried.

Or closer to, um, home it could check out how many Sydney investors are actually frustrated first-home buyers. Often they tell me they’re investing in a unit to let because it’s their only hope of ever owning a place.

Then there are others who only want to rent so they can live somewhere decent – they need investors to be buying dwellings.

No, blame high home prices on the global financial crisis five years ago. It gave us record low interest rates and a building slump even as the rate of population growth was increasing.

So demand was fuelled by low interest rates and supply constrained by a lack of new building.

If you believe the latest QBE annual Australian Housing Outlook, compiled by BIS Shrapnel, prices are going higher.

I must admit each year it seems overly optimistic about property prices but that was so only once in the 13 years it’s been published. Unfortunately that was a doozy because it got the direction wrong as well, and being in 2010 was just recent enough to survive my short-term memory.

In Sydney, the market where the shortage of housing stock is the most chronic and investors are apparently running amok, it predicts prices will rise 9 per cent. Oops, that’s over three years. In fact, the forecasts are for 7 per cent this financial year, slowing to 5 per cent the following year and then falling 3 per cent.

Brisbane is the place to be. Its values are forecast to rise 17 per cent over three years with the Gold Coast not far behind with a projected 15 per cent.

On the other hand, home prices in Melbourne, where there’s a glut of units, are forecast to rise only a smidgin: 3 per cent this financial year, then 2 per cent culminating in a 1 per cent drop in 2016-17. Maybe the Reserve bankers should just pop down to Melbourne?

Or perhaps not. They might not get past Docklands which I suspect is pulling the median growth rate down.

Anyway these are all averages. You’ve heard me say before an average is something that doesn’t exist.

Nor is the growth in Sydney and Melbourne where you might expect. It’s the middle and outer suburbs that have been going gangbusters, not the inner city.

Hmm, then again that shouldn’t be a surprise since inner city prices were relatively high to begin with, not to mention high-rises materially adding to supply.

So why will prices drop in 2016-17? The reverse of why they’ll rise first. Supply will be growing faster than demand. Oh, and interest rates should be higher by then as growth picks up, not that they’ll be at killer levels.

But there’s something else too. Australia’s net immigration is falling. The number of arrivals on the employer-sponsored skilled workers 457 visa is falling as the mining boom fades away and departures “should increase due to the lack of opportunities for temporary migrants to extend their stay”, as the report puts it.

This should please the Reserve Bank. It suggests the property boom is slowing down and will eventually self-correct.

And it may as well stop fretting about the rise in investment loans, mostly concentrated in its own backyard because that’s the demographic trend. The proportion of renters to owner-occupiers is rising, especially in Sydney.

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Posted by David Potts – The Age on 16th October, 2014