- Australian property investors looking past short-term challenges, including APRA’s crackdown on investor lending
- The prospect of long-term wealth creation and capital growth continue to attract investors to real estate
- Qualified professionals are an increasingly important asset for investors
In spite of challenges posed by the tightening of lending by banks, and ongoing fears of a housing bubble, Australian property investors remain reasonably upbeat.
According to the Property Investment Professionals of Australia’s (PIPA) 2015 Property Investor Sentiment Survey, which gathered insights from more than 1,000 property investors, well over half of investors (63%) believe now is a good time to invest in property and 60% are looking to purchase a property in the next 6-12 months.
Only 20% of investors say that concerns over a property bubble have caused them to put their property investment plans on hold.
PIPA chair Ben Kingsley said the survey results confirmed that investors are taking a longer-term, more sophisticated approach to property investment.
“Property investors are looking past the noise and remaining focused on the long-term investment rewards that well-selected property can deliver,” he said.
“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. 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.”
According to PIPA’s survey, an overwhelming majority of investors (74%) consider metropolitan markets are the most appealing place to buy right now. And Brisbane was identified by 58% of investors as being the state capital which currently offers the best investment prospects.
A number of issues are keeping investors awake at night
A third (32%) of property investors say that recent changes to lenders’ policies have impacted on their ability to secure finance for an investment property. However, 37% say it hasn’t impacted them and 49% reported buying an investment property in the last year.
A tightening of lending by banks to property investors is â€“ by a small margin â€“ the biggest concern for investors. Some 20% say it is the most important challenge (out of eight identified in the survey). This issue was only slightly more important to investors than a correction in property prices (top concern for 19%) or a possible removal of negative gearing (16%).
When it comes to negative gearing, the survey found that only around half of investors (54%) have negatively geared property and tax considerations are the most important reason for investment for just 7% of investors.
“Many investors are not negatively geared and for those that are, their properties will eventually generate positive incomes and greater tax revenues,” Mr Kingsley said.
“This suggests that investors see the removal of negative gearing as being bad for the market as a whole – if not necessarily for themselves.”
Property professionals are becoming more important
The survey results show that property professionals are becoming more important. Of those surveyed, two thirds (66%) secured finance for their last investment property from a mortgage broker.
“Mortgage brokers are an important source of finance advice for investors. They tend to better understand the investment lending landscape and offer great choice to investors,” Mr Kingsley said.
Investors also seek advice from many other sources, including lawyers/conveyances and accountants and there is strong interest in using property investment advisers.
More regulation and education are needed to protect investors
The survey found that a significant 67% of property investors believe Australia needs a more comprehensive education program for property investment and 91% believe that people who recommend property investment should be regulated and licensed.
“Unlike other asset classes, property is not classified as a financial product by ASIC and the provision of property investment advice remains unregulated,” said Mr Kingsley.
“PIPA is continuing to lobby the federal government to bring property investment advice into a regulatory framework and we remain dedicated to supporting a healthy, sustainable property investment industry where education and regulation support good outcomes for all involved.”
| PIPA’s 2015 Property Investor Sentiment Survey – Key stats at a glance
For a copy of the 2015 Property Sentiment Survey Report and full survey results visit www.pipa.asn.au/survey2015
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. For more information visit www.pipa.asn.au
Ph: 02 8248 3744