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Property boom 'will be led by investors buying established homes'

A property boom will only be led by investors purchasing existing homes.

Australia is forecasted to go through a property boom, according to many leading commentators.

Columnist Robert Gottliebson said that this will be due to people investing in homes rather than shares, as economic conditions improve.

Saul Eslake, chief economist at Bank of America Merrill Lynch, told the Sydney Morning Herald that any potential increase in property purchases will be led by investors buying established homes, rather than those buying new builds.

He explained: "An investor-driven recovery is much more likely to put upward pressure on prices and is less likely to induce new dwelling supply."

Mr Eslake said that this was the opposite of what the Reserve Bank wants and went against its recent changes to inflation rates

He added that the price boom situation was in some ways regrettable, in that it may not encourage first-time buyers and families from entering or moving up the property ladder.

Posted by Craig Francis

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