Nearly one-third of property investors say recent measures to rein in borrowing through curbs have reduced their ability to secure finance to make a purchase.
A Property Investment Professionals of Australia survey of more than 1000 investors found that 32 per cent said measures such as higher loan-to-value ratios and steeper borrowing costs affected them.
Tighter lending standards have also become the biggest concern for investors and 20 per cent said it was the largest challenge. Fears of a possible correction rated second, as 19 per cent of respondents said it was the top concern. A possible removal of negative gearning came third and 16 per cent said it was the main concern.
Sentiment is also turning more cautious, as 63 per cent of investors said now was a good time to invest in property, down from the 79.6 per cent of respondents who said the same thing at the time of the last survey a year ago.
The survey suggests the long-standing efforts by banking regulator APRA to bring some heat out of the property investment market are working. In August, broker Mortgage Choice said it was seeing no evidence that investors were pulling back. Figures from Fairfax Media owned Domain Group last week showed house price growth has slowed sharply in Sydney and Melbourne.
PIPA, an industry body founded in 2005 to represent the interests of property investment professionals, said the results showed the need for mature investment.
“While Sydney’s housing market has become overheated, savvy investors know there are plenty of markets outside of Sydney where there are still opportunities to be found,” chairman Ben Kingsley said.
“And with interest rates still low by historical standards, it is still a good time to invest in the housing market, if you’re doing your due diligence and seeking advice from professionals.”
Investment intentions are also lower, as 60 per cent of respondents said they were planning to buy property over the next six to 12 month period, compared with 67.9 per cent a year ago.
Not all investors have been hit by the tightening in lending standards, however. Of the respondents, 37 per cent said the new measures had not affected them. A further 27 per cent were unsure whether it had affected them.
PIPA conducted the online survey of 1063 property investors in September.
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Australian Financial Review , 28 October 2015, by Michael Bleby