Falling sales volumes mean that the Australian property scene is very much a buyer's market, but investors have been slow on the uptake, according to the latest RP Data report.

RP Data's Property Pulse has found that sales volumes in the mainland capitals fell by 24% during the first quarter of 2008, "indicating slower market conditions and less competition in the property marketplace".

Sales volumes hit a four-year peak in the second quarter of 2007, with a total of 86,241 houses and units being sold, according to RP Data's figures.

But by the end of the first quarter of 2008, this number had dropped dramatically to 58,072 - a decrease in sales activity of more than 30% in the space of six months.

"The slowdown in market activity comes as no surprise, considering factors such as the US sub-prime meltdown, the sharemarket collapse and ongoing domestic inflationary pressures, which have attributed to the erosion of consumer and business confidence," said RP Data national research director Tim Lawless.

Lawless also pointed to a decline in the number of new housing finance commitments as a sign of the property market's slowdown.

According to ABS figures, the total value of all housing finance commitments dropped from $18.1bn to $6.5bn between June 2007 and May 2008, with only 52,000 new mortgages being recorded in May.

However, Lawless said he believes that this reduction in housing demand means it's very much a buyer's market, especially as the slowing national economy makes interest rate rises an unlikelihood for the near future. 

Fixed rate loans saw their share of the mortgage market fall from 24% to 13% between March and May; Lawless said this is a clear sign that the property buying public believes rate rises have been put on hold.

"It appears that more borrowers are selecting a variable rate of interest, which is a sign of improving confidence that rates may be stabilising," said Lawless.

While Lawless said that a big increase in consumer confidence and economic conditions, and "a levelling in inflation, which will offer some certainty as to the direction interest rates will take" are required for investors to come back to the property market in force, his message is that fortune may favour the bold.

"For confident buyers not deterred by interest rate increases, the current conditions are likely to offer great buying opportunities. We can safely say this is a buyer's market," said Lawless.