Lisa Montgomery, Resi's head of marketing and consumer advocacy, says that with the exception of Western Australia and parts of Queensland there has been a dearth of property investors in the market in the last couple of years as drops in property prices and low returns simply did not provide sensible prospects for many investors. "However, the pendulum is likely to start swinging back in 2007 as some fundamentals change. Despite three interest rate rises this year, property prices appear to have either settled or started increasing in most parts of Australia, taking away fear that the bottom will drop out of the market," says Montgomery. "But the big impetus for investors is likely to come from the low rental vacancy rates, which are widespread throughout Australia and even reaching chronic proportions in some places such as Canberra, Adelaide and Melbourne." Despite this optimistic outlook, a separate survey conducted by BankWest and the Mortgage Industry Association (MIAA) found that only 9% of investors are expected to buy within the next six months due to the current economic conditions. MIAA chief executive Phil Naylor says the study shows that investors remained deterred by the high property prices and rising interest rates.

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