Investors, first homebuyers flock into Sydney's property market

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The long-awaited return of Sydney investors appears to have finally arrived, as shown by the rising number of available rental properties in some parts of the city.

The latest data from the Real Estate Institute of NSW (REINSW) revealed that the percentage of available properties in Sydney suburbs 25km or more from the CBD has jumped significantly.

"At last, it seems we are seeing some return to the market by investors, at least in the key population belt of Sydney," said REINSW Steve Martin.

He said many tenants are also taking advantage of the First Home Owner Grant boosting which is freeing up some rental stock.

Martin pointed out the percentage of available properties 25km or more from the CBD has jumped to its highest level since August 2007, up 0.3% to 1.7%. This is more than double that recorded in May 2008 when available properties in outer Sydney hit their lowest level for some years at 0.8%.

"There's now a clear trend occurring which points to a return of investors to the market, at least in certain areas. I think we're now starting to see the effect of the low interest rate environment with investors following the lead of the first homebuyers," said Martin.

Despite the increased number of rental stocks available, the overall vacancy rates in Sydney remained unchanged at 1.4%. Middle ring suburbs tightened slightly to 1.3% from 1.5% in December 2008. The vacancy rate in Wollongong has also fallen to 2.4% from 3%, while Newcastle and Gosford recorded an increase in available rental properties in the same period.

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