• Conflicting reports on price growth released
• Timing market cycles is important
• Building up enough equity is a must

Last week the QBE Housing Report forecast capital city property prices would rise 9-20 per cent over the next three years.

The following day the National Australia Bank's quarterly residential property survey forecast growth of just 1.5 per cent over the next year.

It is incredibly confusing.

Regular readers of this column know that we don't believe the recent property boom can be sustained because, by international comparison, our market is the most expensive in the world.

Markets move in cycles.

Every boom is followed by a bust and every bust is followed by a recovery.

It's all a matter of timing.

Australia's boom has to end at some time. Our gut feel is (and several of the independent property indicators show) that it is already slowing.

That's a good sign.

A slow deflating of the property bubble is much more preferable than a crash. But you need to be prepared for both.

We still think you need to build up at least a 30-40 per cent equity in your house over the next two to three years as protection against being a forced seller in a bust.

On the other hand, a bust or moderate deflating of the bubble will present good buying opportunities for those who can't afford to buy (or invest) at current levels.

The key to the real estate merry-go-round is waiting for the right timing and being prepared for the opportunities when they arise.

That means developing a disciplined savings strategy right now to build a deposit.

Trying to scrounge for a deposit at the last minute limits your opportunities and increases financial stress.

One good approach to saving is to follow the "15 per cent rule" which says that to be financially independent, you need to save 15 per cent of your gross income. While this rule applies to financial wellbeing in general, it's a good idea for those saving for a home.

It's possible to be financially secure if you save only 10 per cent, but if you save 15 per cent of your income throughout your working life, you will own a nice home and have at least $1 million for retirement on top of the house.

When you're saving for a home deposit, devise an investment strategy based on the time left before you aim to put down a deposit.

Buying in five years time or more

If the purchase of your house is years away, the best option could be the share market.

Share returns outperform all other investment classes over the long term. See a stockbroker or financial adviser who will provide you with options.

When it comes to the share market, financial advisers are likely to recommend managed share funds.

Even though managed funds do have fees, you will have some of the best investment brains in the business working on your money and the benefit of a diversified portfolio.

Many managed investment funds also have regular savings plans where, after investing a minimum amount, you can contribute small regular amounts of as little as $100.

Buying in three to five years

This is too short a time for full share market exposure. Experts say a good vehicle for your money is a balanced managed fund. Financial advisers are again the best people to talk to about how to invest in this type of fund. It should consist of a mixture of local and overseas shares, fixed interest, property and cash.

The share and property component of the balanced fund will ensure that you have some exposure to investments which are likely to experience good levels of growth.

The fixed interest and cash side will provide a lower return, but these investments are far more secure. While over the long term the profit will be less, a balanced portfolio is not as volatile as a share portfolio.

Many of these investments are indexed funds which usually charge lower fees.

They can operate on lower costs because their investment portfolios simply mirror share market indexes, which takes a lot less work.

Buying in less than three years

Unless you're a gambler, you should really look to cash and term deposits because there is simply not enough time for shares and managed investments to work properly.

Share markets are volatile, and there is the possibility of losing money over the short term. If the share market takes a tumble you mightn't have time to recover.

With cash and term deposits your capital is guaranteed, and you'll gain a moderate return.

In effect, these deposits give you certainty.