My observations are that a lot of IO loans are investors, yes, but flipping itself is quite a small market.
The costs involved in flipping in Australia make it unattractive unless you are a builder or can do the majority of work yourself. Even then stamp duty takes a hefty chunk along with other expenses.
The sydney and melbourne markets have been good long term investments for a long time and investors are used to long stagnation / minor price correction periods. The market has always turned around and rewarded holders with solid capital gain.
Whether or not this will happen in the future is not my point, my point is that minor drops will not see a flood of properties onto the market because the investors will sit tight waiting for their next round of capital appreciation and collect rent along the way.
