An investor survey has revealed how Australian property investors feel about their confidence levels in their decision to invest, what the most popular capital city is for investors to invest in, as well as more calls for better regulation in the industry.
The results of the third annual Property Investment Professionals of Australia (PIPA) Property Investor Sentiment Survey has found 70 per cent of investors believe right now is still a good time to invest, with 61 per cent looking to purchase a property within six to 12 months’ time.
From a sample size of 742 respondents, the majority of investors are not troubled by issues restricting investors from investing, but the minority who are troubled are rising, as 43 per cent of respondents reported on an adverse impact on being able to secure finance, up from 32 per cent in 2016.
Only a small portion are concerned about a potential property price bubble, with 15 per cent of investors putting buying plans on hold, and only 14 per cent are stopping due to concerns about negative gearing and capital gains tax changes.
Just over half of the respondents negatively gear their properties at 52 per cent, while 62 per cent of those expect to be positively geared in five years’ time.
Investors with interest-only loans are generally fine in being able to meet new principal and interest rate repayments at 55 per cent of respondents.
Refinancing would be on the table for over 23 per cent of investors if they could acquire an interest rate differential of 0.5 per cent, and another 23 per cent for one per cent.
According to PIPA chair Ben Kingsley, the results show investors are looking past the short term and have long term goals in place.
“It has been an eventful time for residential property investors since we published our last survey in 2016. Similar to last year, most property investors are looking past short-term challenges and are remaining focused on the long-term wealth benefits that are available from residential real estate,” Mr Kingsley said.
“The survey also affirms that a lot of the speculation about negative gearing misses the mark. Most investors understand that negative gearing is only a short-term cash flow position, not a property investment strategy. And only a very small minority are attracted to real estate for these tax concessions.”
Most popular capital city
Brisbane stood out among the rest as the most preferred capital city to invest into, with 43 per cent of investors, which Mr Kingsley said was due to affordable property prices, the chance for higher yields, as well as upcoming infrastructure improvements.
“Property investors are becoming savvier. Many of them continue to look outside of our biggest property markets of Sydney and Melbourne, which are coming close to the peak of their cycles,” said Mr Kingsley.
“The two key reasons that Brisbane still attracts investors are affordability and the potential for attractive yields. Brisbane is investing in infrastructure to make the city more liveable and investors are betting on this.”
Following this was Melbourne at 32 per cent, then Sydney at 7.8 per cent, Adelaide at 6.6 per cent, then Perth at 5.5 per cent.
Despite the rise in confidence, 84 per cent of respondents believe more education about the positives and negatives needs to be made available, and 90 per cent believe property investment advice needs to be regulated and licensed.
“Unlike financial planning and mortgage broking, the provision of property investment advice still remains unregulated,” Mr Kingsley said.
Sasha Karen, Smart Property Investment, 27 September 2017