Low rates to attract investors down under

Photo credit: 8LettersUK

Indeed, The Australian reports that investors will account for at least 40 per cent of home loans in Oz, higher than the usual 20 to 30 per cent. Rising house prices will help to make the market more attractive, with ABS figures showing values leaping 7.6 per cent in the 12 months to September 2013. Sydney led the way with a surge of 11.4 per cent, ahead of Perth (8.6 per cent).

That rise in investors, though, will take property sales away from first home buyers struggling to climb the housing ladder.

BIS Shrapnel managing director Robert Mellor said that investors were more likely to have the cash available to take advantage of the low interest rates: "(Most) investors are getting on in terms of their wealth creation and they don't need to borrow more than 70 or 80 per cent (of the home price) and therefore the deposit hurdle is less of an issue for them.

"But for a first-home buyer, the deposit hurdle has become significantly worse in the last couple of years because the government has taken away the (first-home buyer) grant and the stamp duty benefit in some states and so, in relative terms, the first-home buyer has suffered compared to an investor."

Mellor highlights Sydney and Brisbane as investment hotspots thanks to the cities' low supply of real estate, which will push up rents.