The abolition of vendor tax in NSW has just begun to make an impact on the cautious investment market.
The lifting of the 2.25 per cent duty in August was expected to motivate buyers and sellers into action and reinvigorate Sydney's softening property market.
But the news, while applauded by the industry, received a lukewarm reception from investors.
Now things appear to be picking up. Dennis Kalofonos, the principal of Sydney Property Finders, said there had been a significant increase in demand in the past month.
"The market has stabilised and our buyers feel that now is the time to get in," he said.
"I absolutely agree that we have reached a plateau over the past six months and now we are seeing an increase in demand which will stimulate the market again across the board."
The investors testing the water, however, are not new to the property game.
Mr Kalofonos said areas with "fantastic potential" included Potts Point, Elizabeth Bay and Edgecliff.
He said he considered the areas were undervalued because of their range of amenities and proximity to the city.
In the west, Balmain East apartments, Dulwich Hill and Summer Hill are being snapped up because the areas are well tenanted and on major transport lines.
Over the bridge, Neutral Bay and Cremorne are considered good investment areas because of the direct transport services into the city.
Inquiry levels being received through buyer's agents don't always translate into sales.
Eastern suburbs based Goodyerdonnelley agent Pauline Goodyer said she hadn't seen a great deal of difference in the market since the vendor duty was removed.
"We have noticed a few more people looking to purchase properties for investment as opposed to a couple of months ago," she said.
"But there hasn't necessarily been a flood of property on to the market from investors wanting to sell.
"I think there's a sprinkling of that happening but not a massive amount."
Last week's home lending finance figures showed investors were still not entering the market, opting for other investment options.
Auspak Financial Services director Mark Mellick said the property market "literally stopped" with the introduction of the vendor tax and was only just showing signs of recovery.
"When the vendor tax was introduced our settlements dropped between 25 per cent and 30 per cent," Mr Mellick said.
"Our market, especially in the eastern suburbs, slowed down as the only people looking to borrow money were trading up or downsizing.
"The property market was stagnant."
He said although settlement figures had not returned to pre-vendor tax levels, about 5 per cent of investors had returned.
