Interest rates are rising, inflation is biting and there is a general consensus among the biggest names in Australian property that house prices are likely to fall 10 to 15 per cent by the end of the year.

But after that, Gurner and his peers expect a combination of lack of newly built stock and rising demand from buyers as migration numbers increase, to bring back the good times for the sector.

Property doyen Max Beck, a veteran of the credit crunch of the 1970s when his first major Melbourne building business went bust, says as “the tide goes out” more construction firms could fail and developers who have bought building sites with large amounts of debt could struggle to afford to hold onto their portfolios.

Projects will be delayed, apartments and houses will take longer to sell than in previous years. Yet in the absence of higher unemployment numbers, Beck believes the fundamentals of the property market remain strong. Demand for dwellings will start outstripping supply.

“If I wanted to own a new piece of real estate at the moment, I’d probably own a residential building,” Beck says.

Prominent and successful property developers that spoke to The Weekend Australian say a handful of important themes are emerging in the sector: houses prices will likely fall throughout the year, albeit from record levels; the rental sector remains strong; and, construction costs will eventually have to fall or there will be no work.

And when migration numbers pick up again, expect boom times to return as demand for the dwindling supply of housing and apartments surges. Until then, it is a matter of hanging on.

Already, home builders like Metricon have made headlines for striking some financial problems and high-profile companies that have failed in the past year include Probuild, Condev, Waterford Homes and several others.

Profit margins are tightening and the cost of materials are increasing, all while buyers are contending with higher living costs and rising interest.

And yes, house prices will fall.

“You’re talking about a 10 to 15 per cent drop year after a 40 per cent increase in the last couple of years,” says prominent developer Tim Gurner.

“So your expectations were too high if you’re up 25 per cent on a tax-free product like housing and you’re getting depressed.”

Melbourne-based luxury developer Gurner also points to the strong rental market where a lack of new supply means competition is intense between renters, pushing prices up.

“Rental growth has never been better in my career than now. Rents are going up 10-20 per cent and that covers that problem of rising interest rates (for investors).”

There are also some regions and states where the residential property market is still performing well.

Take Perth, where Paul Blackburne, whose Blackburne Property Group stubbornly yet successfully sticks to just building in the Perth apartment market in Western Australia, can’t quite believe what he has been reading about the property industry.

“WA people in the know get frustrated as most national media generalises about the property market and WA has nothing to do with the east at all. We are at a totally different stage of the market,” Blackburne says.

“All the usual stats and facts show WA is a totally different market that is massively undersupplied, affordable – cheaper than the east by far but with (local) incomes higher on average – and there is a massive rental shortage creating rental price boom.”

Blackburne says his group has $1bn worth of luxury apartment projects in Perth in its development pipeline, and about $700m currently under construction that were 95 per cent sold off the plan over the past two years.

“Most of that was before we started to build and it was almost all to local baby boomer owner-occupiers. There was little supply in the market except for our projects.

“We recently got valuations done and (those apartments) are now worth $100,000 to $300,000 more each or 10 to 20 per cent, before they settle over the next year.

“Some buyers have made up to $500,000 already before settlement, as ones we discounted to $1m are now worth up to $1.5m.”

Billionaire Melbourne investor Paul Little says demand for housing in regions like the Surf Coast of Victoria, where he owns and operates a ferry service between Melbourne, Geelong and Portarlington remains strong.

His Little Group is also undertaking residential subdivisions in suburban Perth, where it has four projects in various locations about 20km from the CBD. Little says demand for the housing lots there has not shown many signs of wavering.

“We are probably averaging about 20 sales of land there per month for people to do their own developments (of houses) and that has remained pretty consistent. It is without doubt the most consistent ongoing demand that we have seen anywhere.

“It doesn’t necessarily mean that profit margins are increasing. But what you are seeing is price rises there are at least keeping pace with cost increases for us.

“It might be less affected by some of the typical impacts you see like rising interest rates. To get something affordable you need to go out further in Melbourne and Sydney now, whereas Perth still has a lot of suitable land that is close to the city.”

Elsewhere in the country, Beck says vendors need to re-evaluate the prices they are asking for when selling homes or apartments as stock is taking longer to sell.

“There’s a mismatch between buyers and sellers, particularly the vendors who are really needing to adjust their expectations. They’ve probably got telephone numbers in their eyes after the price rises they have seen in the past few years.

“Things will stay on the market longer, and vendors will need to move to another spot in the market in order to close that gap (between buyer and sellers).

“In these sorts of times you have to run your business better. People say what about the government helping but no, you have to meet the market. It should be about how can you run your own operation better.”

Beck says the well placed property developers are those that already have sites, and are not over leveraged and can afford to hold on to them to wait for buyer demand to return.

“We never start anything until I have a building price that we are comfortable with and we’ve (pre)sold 70 per cent of it. That’s why we are still here.”

His family’s property business has plans for a $130m tower project at Coolangatta on the southern part of the Gold Coast, including 175 one, two and three-bedroom apartments.

Beck says he would be happy to wait to build the project when buyer demand is stronger, and estimates about half of the mooted projects across the Gold Coast at the moment are quietly being delayed.

Gurner, whose eponymous firm has plans for a $1.75bn development at Budds Beach near Surfer’s Paradise that includes three residential towers, believes construction costs are becoming unrealistic and causing project delays.

“I think the trades have had a huge amount of tenders come up over the past 12 months that will now not get built (because of the rising costs) and that the future work pipeline has now dried up.

So they soon will be very keen for work again and be more competitive in their pricing, which is needed. We just need to get that balance right for everyone.”

Gurner has announced or sought approval for a spate of new projects along the eastern seaboard in 2022, though he admits he bought the sites earlier in the year and has made fewer transactions in recent months.

He, like Beck who has taken over a project on his land in Melbourne’s Caulfield that was formerly being build by Probuild, is focusing more on the build-to-rent market, with demand from renters still strong and rental prices being pushed up.

“It is a counter-cyclical play. The renters are still out there. So we are really pushing into that market. I just haven’t seen fundamentals like this before, and that doesn’t change overnight.

“This is not immigration that has created a (rental) boom, it is a genuine domestic boom. And when the borders reopen properly and more people come here, there will be an ever bigger boom.”