Growth in housing finance cooled in August, but investors continue to dominate the market due to sluggish growth in loans for owner occupiers.
The number of home loans approved in August fell 0.9 per cent, according to the latest data from the Australian Bureau of Statistics.
Investor housing finance by value eased 0.1 per cent in August, from its all-time high in July, but still equates to 49.7 per cent of all housing finance, excluding refinancing.
CommSec economist Savanth Sebastian said rapid price rises are pushing owner occupiers and first home owners out of the market.
House prices grew more than 10 per cent nationally in 2013/14, and 15 per cent in Sydney, driven by a big rise in investor activity, mostly for existing homes.
"They seem reticent to wade into the market and they're just finding it very difficult, affordability is certainly a concern," Mr Sebastian said of first home buyers.
Reserve Bank governor Glenn Stevens last month raised the possibility of changing regulations to curb risky lending to property investors, who are driving the record rise in property prices.
Mr Sebastian said it will be interesting to see if growth in investor activity cools as a result of those comments.
"Purchasing a property is a large transaction, its certainly not as easy as wading into the share market," Mr Sebastian said.
"Any sort of jawboning by the Reserve Bank will have a more amplified affect on the property market than it would have on currencies or the share market."
JP Morgan economist Ben Jarman said the RBA's talk of regulation of investor housing activity might be enough to help cool housing market.
"The RBA first started firing warning shots on mounting risks in investor lending around mid-year, and it seems unlikely that this would have forced a sudden stop to such activity," he said.
"RBA officials would be unlikely to declare victory on one month's worth of data, but it does appear that the trend in investor lending is decelerating," he said.
But the prospect of regulation to restrict risky lending might make local investors reluctant to get in to the market, Mr Jarman said, and it is still possible that foreign investment activity keeps prices on the rise.
Another factor that could contribute to easing the rapid rise in house prices would be an in increase in housing supply.
But Mr Sebastian said loans for housing construction had fallen in August.
"What you would like to see in this particular result was that dwelling construction has lifted, but that has fallen for the second consecutive month," he said.
"Building approvals have been solid in the past few months, they've hit record highs, but the fact that owner occupied construction fell was probably one of the more disappointing results," Mr Sebastian said.
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