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Think back to a year ago…

By Elke Blake

Property prices across the country had been falling for nearly two years. Europe was in turmoil, and customers weren’t spending. Then the reserve bank reacted, slashing interest rates by 75 basis points in just two months, forcing down mortgage lending rates from 7.4% to 6.85%.

Ten months later, the housing market has been dragged out of the doldrums by a new wave of activity. House prices are edging up – even reaching a new high in Sydney – auction clearance rates are buoyant and interest rates are at historic lows, but it’s not first-time homebuyers eyeing a plot up and down the east coast or upgraders looking for a Sydney terrace in Annandale that are responsible for the markets new vitality…. it’s investors.

The investors have piled in and been fuelled by historically low interest rates, cheaper prices, generous negative gearing tax deduction and relaxed superannuation rules.

Bureau of Statistic figures show that loans to investors soared 16% in the past year. Meanwhile, lending to owner occupiers – the traditional powerhouse of the market – grew at a far lower pace, just 6.6 over that time.

It seems that investors are leading the Australian property market revival!

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