According to a recent poll, around three quarters of Australian real estate investors have said that they are waiting until the first home owners scheme expires in December before they invest in any more property.

The major reason cited is that the home owners grant has increase competition significantly meaning the market is crowded and house prices are being artificially boosted. Because of this, many property investors are getting their finances in order and waiting until the market becomes less crowded. Most of the real estate investors have said they are planning to buy property in Australia again in either 2010 or 2011.

Part of the problem is falling rents. Many renters are looking to purchase property and vacancy rates in some areas in Australia are said to have doubled – leaving property investors with no income on their properties. The higher vacancy rates are also pushing down rental prices pushing rental yields down.

When the home owner scheme expires, it is hoped that both the rental and the housing market will stabilise and Australian property investors will be able to better predict the return on investment on their properties leading to more confidence and greater numbers buying property and real estate in Australia once more.

Looking to buy in Melbourne? Read our free guide to Melbourne property.

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Visas issued up until the end of June will still have the restriction attached to them however if the holder reapplies for the visa and it is granted, they will no longer have the work-time restriction.

The change to the Australian visa rules could help overseas property buyers who are keen to move to Australia to live and work but have been unable to do so in the past because of the work restrictions. With new house prices becoming more affordable, the new visa law is expected to attract attention from property buyers who are looking for family homes in Australia.

Sydney remains the most expensive city in Australia to buy property and real estate, whilst Hobart in Tasmania remains the cheapest city to buy properties and real estate.

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But what has this influx of people done to property prices? Is it worth investing in the city? The population growth means that demand is strong and this pushes up property prices. It has been reported that in the more desirable areas of the city, demand for housing is outstripping supply. If the current influx of people continues, it looks likely that there will be no change in the near future, and this will see house prices increasing rapidly.

Property prices are growing around 6.5% a year with many prestige properties seeing double figure growth. Over the last decade, the Victorian Valuer General has reported that property prices have grown 15% on average each year – an excellent return on investment properties.

As with anywhere, your choice of area and property is key. The five suburbs that are current property hot-spots are Tyabb, St, Kilda West, Doreen, Cape Schnanck and West Melbourne, all of whom who have seen double digit percentage increases in the past year on the average house price.

The bubble is not likely to burst in the next few years so if you are looking to buy investment property in Australia, Melbourne looks like a good bet. Traditionally, Sydney has always been around 20 to 25% more expensive than Melbourne. However, comparing inner city flats between the two cities shows a disparity of around 45% meaning there is probably still a lot of sustainable growth left in the Melbourne property market.

There is also an increased demand from immigrants, many of whom are looking to rent. This is good news for investors as it means the rental market is buoyant and you should be able to receive a steady rental income.

If you are looking to buy, we would advise the middle and outer suburbs. There are many inner-city high rise blocks with almost the same look meaning there is nothing special or unique about them. They also run the risk of architectural aging where the style goes out of fashion so it is probably better to buy something slightly larger slightly further away from the centre of town.

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Although property is still fairly high, it means there will be some bargains to be picked up this year. In the long term, Australia could be a fantastic opportunity for investment, as long as you are prepared to hold onto your property until the market recovers and begines to bounce back. With the gap between average disposable income and required income to buy a first home increasing steadily, the rental market is booming, again an excellent sign for investors.

Perth and Melbourne are two cities where first time buyers are struggling to meet the mortgage requirements for a house meaning that they are having to rent. For those who have already bought, any further rate increases could see the mortgages pushed beyond their means meaning even more property may be available on the market in the next few months.

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