- New survey reveals majority of property investors still looking to invest in next 6-12 months
- Low interest rates, capital growth prospects and property’s stability revealed as key drivers behind investor appetite
- Survey highlights investor demand for regulation of property investment
Following months of hot property market activity, a national survey of property investors has revealed that investor demand for property shows little signs of slowing any time soon.
The latest Smart Property Investment / PIPA Property Investor Sentiment Survey indicates that despite talk of property bubbles and concerns that property price growth is unsustainable, confidence in the Australian property market remains high.
According to the survey, 80% of investors believe now is a good time to invest in property, and 68 % are looking to purchase an investment property in the next 6-12 months. These figures were only slightly down from the inaugural survey conducted in February 2014, where 84% of respondents said it was a good time to buy and 71% of investors said they planned to buy within the next 6-12 months.
Low interest rates cited as the most compelling reason to invest in property (30% of respondents). Capital growth opportunities (25%) and property’s stability compared to other asset classes (22%) were also cited as top factors underlying property’s investment appeal.
PIPA chair Ben Kingsley said the survey results confirmed investors were unwavered by any concerns of the property market overheating.
“The property market is gaining a considerable amount of media attention at the moment and there has been some concern that some markets are overheated,” he said.
“Certainly there has been strong price growth in some markets, but this is not the case right across the board and these survey results reinforce the fact that property remains a firm investment favourite. Investors recognise the long term capital growth prospects property brings and they are taking advantage of a low interest rate environment to build their property portfolios.”
Smart Property Investment managing editor Phillip Tarrant said the record-low interest rate environment looked likely to encourage more homebuyers and investors into the property market in the coming months.
“A clear relationship can be seen between low interest rates and property investment activity,” he said.
“More than half of respondents felt their recent purchase decisions were accelerated by the low interest rate environment. With interest rates unlikely to rise anytime soon, we may see strong property market activity continue for some time yet.”
The survey also found that over half of all survey respondents (56%) believe Brisbane offers the best investment prospects, an increase of 8% from the beginning of the year, followed by Sydney (13%), Melbourne (11%) then Perth (9%). Queensland was also highlighted as investors’ preferred state, with 22% of investors nominating the state as the location for their next property purchase.
Despite property’s long term capital growth prospects, Mr Kingsley said it was essential property investors carried out good due diligence on any property purchase to ensure they are making a sound investment for both the short and long term.
“In a hot property market it’s especially important to take a thorough approach to research to ensure you’re paying the right price. I’d also urge all investors to be cautious of any property spruikers who are particularly active in the current market and seek out qualified property investment advice.”
Recognising property as a financial product – more needed to protect investors
The survey also showed the vast majority (80%) of respondents believe the Government should be doing more to protect investors against property spruikers.
An overwhelming majority of respondents (87%) also believe that people who recommend property investment should need a licence to do so.
“Unlike other asset classes, property is not recognised as a financial product by ASIC, which means anyone is free to provide property investment advice,” said Mr Kingsley.”
“A lack of regulation leaves consumers vulnerable to unscrupulous operators, and this survey reveals that this is a chief concern for investors.”
“PIPA is actively lobbying the federal government to bring property investment advice into a regulatory framework, but until such regulation is introduced, we will continue to provide the public with warnings about working with ethical and professional industry practitioners.”
The Smart Property Investment/PIPA Property Investor Sentiment Survey surveyed 627 respondents over August and September 2014.
NOTE TO EDITORS
The Property Investment Professionals of Australia (PIPA) is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved with property investment.
Since its inception, PIPA has developed codes of ethics and conduct and professional standards of accreditation and education for the property investment industry, including a Property Investment Adviser Accreditation Course.
PIPA is actively lobbying the federal government to bring property investment advice into a regulatory framework. Until such regulation is introduced, PIPA will continue to provide the public with warnings about working with ethical and professional industry practitioners.
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