A recent survey has found that even though Australia’s most-populated and unaffordable capital cities are reaching their downturn in the market, the majority of investors are unfazed and in fact believe this year is a better year to be investing than last year.

The Property Investor Sentiment Survey, conducted by the Property Investment Professionals of Australia (PIPA), saw that from 820 property investors, 77 per cent said now is a good time to invest in property, more than last year at 71 per cent.

Nearly every investor also has a plan regarding their property investments at 98 per cent. Over a quarter at 28 per cent had detailed plans for long-term investment.

Additionally, 90 per cent are not concerned with Sydney and Melbourne’s price declines, saying that they will not slow down their investment plans.

This may be related to the fact that the capital city with the best investment prospects was determined to be Brisbane with 44 per cent of investors believing so, up from 43 per cent last year. In comparison, 26 per cent said Melbourne (down from last year’s 32 per cent) and 8 per cent said Sydney.

“The affordability of Brisbane compared to Sydney and Melbourne has really come into sharp focus in the past year,” said Peter Koulizos, PIPA chairman.

“Not only are investors considering the Sunshine State capital as an investment location, a growing number are choosing to migrate to take advantage of the significant value gap as well as Queensland’s enviable lifestyle and strengthening economy.”

Houses maintained to be the favourite property type, maintaining a response rate of 67 per cent from last year. Interest in units and apartments have declined from last year’s 9.3 per cent to this year’s 6.5 per cent.

Buying into a metropolitan market was also the clear favourite at 72 per cent of investors. Regional markets saw a slight boost in popularity, rising by 5 per cent to 20 per cent this year, while coastal locations saw a decline in popularity down by 4 per cent to 8 per cent this year.

What has been a rising concern for investors however is access to finance, as 48 per cent this year said investor lending policy changes have made it harder to get the necessary loan to add to their portfolio, which was up from last year’s 43 per cent.

Another concern is the possibility of changes to negative gearing and capital gains tax policies, as 45 per cent said they would rethink investing in the future if these changes were to occur. Most investors at 71 per cent also believe changing negative gearing and capital gains tax will not improve housing affordability, the main driver behind these potential changes,

“The financial services crackdown on investors is having an impact on sentiment,” said Mr Koulizos.

“Turmoil in government ranks that saw a change in the prime ministership has translated into increased opinion poll support for the opposition, so investors face the very real prospect of seeing tax deductions cut, and this is playing into their purchasing decisions.”

A third concern for investors was property investment advice and its lack of formal training. Most respondents, at 95 per cent, said property advice providers need to have formal training and 90 per cent said there needs to be licenses or regulation involved in the property investment advice sector. Further, 87 per cent said investors need more education relating to the risks and benefits of investing.

“The survey also again highlights the need for improved professional standards and regulation of the property investment advice industry,” Mr Koulizos said.

“Indeed, property investors are crying out for more rigorous standards in the real estate investment advisory sector.”

   

Sasha Karen, Smart Property Investment, 24 September 2018
https://www.smartpropertyinvestment.com.au/research/18584-market-softening-not-scaring-majority-of-investors