Real Estate Investors 'Drawn in by Rate Cuts'

Investors are being attracted to the real estate market due to recent interest rate cuts, although owner-occupiers are yet to be convinced.

This is according to the Real Estate Institute of Australia (REIA), which cited Australian Bureau of Statistics (ABS) housing finance figures as indicative of this trend.

The data showed investment housing commitments climbed 1.5 per cent in February 2013 when compared with January, resulting in the ninth consecutive monthly rise.

Interest rates have remained the same since December, with the Reserve Bank of Australia (RBA) deciding to keep the current level of three per cent earlier this month (April 2).

The REIA stated owner-occupiers have been slower on the uptake, with commitments for home loans dropping by 0.5 per cent.

Despite this decrease, real estate in Victoria, South Australia and Western Australia saw gains - with approvals edging forward 0.1 per cent, 0.1 per cent and 0.4 per cent respectively.

Peter Bushby, REIA president, said the primary reason for the slump is state governments removing incentives for first home buyers.

"It is a concern that owner-occupiers are not responding to the easing in monetary policy," he explained.

However, the number of commitments for the construction of new homes increased by 0.5 per cent.