A quarter of Sydney's most desirable residences offered for sale during the first six months of this year were snapped up by Asians, he said.

Hong Kong buyers were usually end-users who were emigrating, looking for an overseas base or needed an apartment for their children who were studying in the country, Mr Marriott said. Buyers from Singapore tended to be investors, he said.

Sydney's residential properties were becoming increasingly attractive to buyers from the territory because the market had bottomed out, Mr Marriott said, and yet prices appeared reasonable compared to those in Hong Kong, where luxury home values have jumped 320 per cent in the last three years.

The cost of a modern, luxury high-rise Sydney home varies from A$250,000 (about HK$1.43 million) for a one-bedroom flat, to $400,000 (HK$2.28 million) for a two-bedroom apartment, $650,000 (HK$3.71 million) for a three-bedroom apartment, and $3 million (HK$17.14 million) for a penthouse, Sarah McCarthy, project co-ordinator for Australian developer Market City Property, said.

Singaporean investment was 'much more aggressive in 1993' compared to this year, Mr Marriott said. Most Singaporean buyers were spending less this year because rising house prices were pushing down investment yields, he explained.

Sydney's residential prices rose between 10 and 15 per cent during the last 12 months.

Mr Marriott expected prices to rise another 15 to 20 per cent in the prime areas of the city over the next year, with rents rising by seven to eight per cent.

The high levels of Asian investment are having a significant impact on the physical nature of the city's housing market.

Australians have traditionally favoured houses with gardens located in Sydney's suburbs, but in recent months many have started to gravitate to high-rise apartment blocks in the city centre, Jan McNally, residential director at property consultants Richard Ellis, said.

The new wave of Sydney home purchasers were following a trend set by Hong Kong and other Asian buyers for newly built apartment blocks, Mr Marriott and Ms McNally claimed.

Asian buyers in Sydney have favoured these types of properties since investment from the region started to grow at the end of the 1980s, Mr Marriott said.

The effect on the Sydney skyline is dramatic. The number of upmarket high-rise apartment blocks in the city's central business district was set to treble from the mid-1980s to the middle of this decade, Ms McCarthy said.

There are now about a dozen new apartment blocks, each containing a hundred or more units, under construction in Sydney's main business district, adding to the six large high-rises which existed in the mid-1980s.

At 45 storeys high, the largest of these developments is The Peak, which will be completed in 1996.

Asian buyers, notably from Hong Kong and Japan, who 'underpinned the market' for high-rise homes were being joined by a variety of Australian buyers, she said. These included childless 'yuppie couples' who worked in the city centre, retired people and executives from multinational companies.

Well-heeled Australians started to join Asian buyers looking for city centre homes during the recent sale of apartments at the new Highgate residential development, Ms McNally said.

Only a handful of apartments remained on sale at the 216-unit development, most of which were bought by Australians. Hong Kong buyers have bought 33 units to date.

The announcement that Sydney will host the 2000 Olympics has boosted confidence among local buyers, encouraging them to return to the market.

Barry Lea, regional director for private bankers Hill Samuel, one of the territory's leading mortgage lenders on Australian property, said Australia had overtaken Canada as a centre of interest among Hong Kong buyers during the last few years, but remained 'a poor second' to Britain.

Sydney, Brisbane and the Gold Coast received most attention from the territory's buyers, he said.