A rise in the number of investment properties whose rental returns exceed the cost of the mortgage will trigger a recovery in the housing market.

Cuts to official interest rates, and years of foundering prices and rising rents mean investors can, in some parts of Sydney and Melbourne at least, now buy properties that will return about as much in rent as they cost in mortgage repayments.

'There is a real possibility we will see positively geared properties emerging this year in the affordable markets of the southern capitals,' said SQM Research managing director Louis Christopher. 'Vacancy rates are still very tight at the affordable end of the market so rents will continue to rise in the sector in 2009, further boosting returns for investors.'

The Australian