Property prices will most likely fall before they rise again, predicts real estate veteran and the Director of KR Peters Real Estate Peter Nicolls.

"No way known will 2023 be a year of growth," said Mr Nicolls.

Mr Nicolls said the steep upward movement in interest rates had shrunk people's buying power as commercial rates soar past 6 per cent.

"With nine interest rate rises since May last year, and another three forecast, the confidence of home buyers has been severely dampened," he said.

The Reserve Bank of Australia (RBA) is expected to hike rates by another .25 per cent when it meets in March as it attempts to bring inflation back into its target range.

A further two increases in the next three months would take the cash rate to 3.85 per cent by May.

If that happens, someone with a $500,000 loan will be paying an extra $1,058 a month since April 2022.

"Home buyers' buying power has been completely diminished. Added to that are increases in land tax and rates, extra repayments on loans and dearer insurance because of natural disasters like the floods. It is becoming very very hard for a lot of people. The costs to hold a residential property have become astronomical."

Mr Nicolls said some experts predict prices will fall by up to another $100,000, however he believes that is an "exaggeration".

His own prediction is that prices will soften by around 5 per cent over the course of 2023.

"What happens with prices depends on supply and demand. There is still a shortage of properties at the moment and buyers still in the market place, so that is having a positive effect," he explained.

"There is talk of an increase in immigration, but that still has to flow through. Although in recent weeks we have seen a strong return of Asian buyers in Knox and Monash.

"However, there is also a shortage of trades and materials, which is hampering the new home market.

"Nothing is flowing easily at the moment."

Mr Nicolls said days on market had ballooned over the past months to 60 and sometimes 90 days "unless the property is unique, or the vendor is motivated to put it on the market at today's price".

Mr Nicolls said on the plus side rents had "gone up considerably" however, those landlords with an existing tenant are hampered by how much they can increase rent.

"If you have an existing tenant you can only increase the rent by the market so at the end of the day the landlord is worse off."

Mr Nicolls encouraged buyers and vendors to consider their positions carefully and reassured both that providing they buy and sell in the same market they "won't get burned".

"The bottom line is if you can spot a good deal grab it. Don't wait six months or until the market bottoms out. The market might be at rock bottom or pretty close now, it all depends on a vendor's motivation."

Mr Nicolls said the next big test for the economy will be when an estimated 800,000 mortgage holders come off fixed rates in the middle of the year.

Another challenge is the solvency of building companies, large and small, many of whom are "just treading water".

"Property prices are hanging in there surprisingly, but the strain is enormous. Despite their being less people at open for inspections, there are genuine people wanting to buy," Mr Nicolls said.

"And despite the challenges we face at the moment, it is important to remember that prices are still higher than what they were three years ago.

"Negative equity is still very low at 1 per cent. But if there are three more rises in quick succession that figure could reach 4 per cent.

"It is going to be a difficult year particularly if a recession comes into play."