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Almost one-in-two property investors are more likely to buy a property in the next year because of the COVID-19 pandemic, the leading industry group has said, with many casting their eyes interstate to Queensland.
About 45 per cent of investors are more likely to buy in the next year as property prices are widely forecast to contract, according to the PIPA annual investor sentiment survey.
“About 67 per cent of investors believe that now is a good time to invest in residential property … (a drop of 15 per cent that is) no doubt a direct impact of the pandemic,” Peter Koulizos said, chairman of the property investment professionals of Australia (PIPA)
“However, at the current time, the property market has continued to show its resilience with prices materially stable in most parts of the nation.”
The online survey’s findings, of nearly 1100 property investors in August, come as property prices are widely forecast by banks, analysts and experts to contract by about 10 per cent over the next year.
Buy and hold strategy adopted by some: PIPA
The majority of property investors are hoping to wait out the property contraction forecast for the coming year or so, according to the survey.
About 71 per cent are less likely to sell their property, the survey found, compared to the 7 per cent who said the COVID-19 pandemic made them want to sell.
“The pandemic has made it less likely they will sell a property over the next year, which is another factor that will help to underpin property prices,” Mr Koulizos said.
Some investors are worried about the rippling effects the coronavirus will cause; about 18 per cent worry about its toll on their portfolio.
A minority of investors deferred their mortgage: PIPA
Most investors managed to maintain their investments during the pandemic with little impact, according to survey results. About 92 per cent of them did not apply to defer their mortgage repayments and 75 per cent of them didn’t have to extend the term of their loans.
The report did not reveal how many renters were ultimately granted a reduction. About 16 per cent of investors had tenants who applied for a rent reduction or deferral during the pandemic, it said, and about 47 per cent of them were eligible under relevant state-based legislation.
This contrasts with a report released by a rental advocacy group released in June. Less than 10 per cent of renters confronted with a loss of income during COVID-19 were granted relief with an adequate discount, Better Renting said.
Looking interstate for property growth
A growing number of investors — about 40 per cent — are looking to snap up property in other states, PIPA said.
Queensland is considered to have the best investment prospects in the coming year, according to 36 per cent of people surveyed. It’s followed by Victoria at 27 per cent and NSW at 21 per cent.
Capital cities adhered to the same pattern. About 36 per cent of people surveyed said they’d put their money into a Brisbane property, followed by Melbourne at 27 per cent, Sydney at 18 per cent and Adelaide at 8 per cent.
The trend of interstate investing has been growing in recent years, Mr Koulizos said.
“Investors are recognising the value of working with property investment professionals to help them secure the best opportunities across the nation,” he said.
Demand in capital cities fall as regional towns pick up: PIPA
Investors are still keen on buying a property in metropolitan areas, the survey found, but the sentiment is on the decline. About 61 per cent of investors surveyed said they’d buy property in a metropolitan area, a drop of 12 per cent compared to the year earlier.
Regional markets on the other hand are gaining momentum, PIPA said. About 22 per cent of investors said they’d buy a regional property, an increase of 7 per cent, with coastal properties rising by 4 per cent to 12 percent.
Remote working, barren cities and country lifestyles helped accelerate the shift in demand, Ben Plohl said, a buyer’s agent and PIPA member.
“We have been active in parts of regional New South Wales and regional Victoria over recent months because of the favourable market conditions in these locations,” he said.
“… Many of these areas will be welcoming plenty of new residents in the months ahead, which will likely further strengthen property markets in some regional locations.”
Some investors want to move to the country too: PIPA
About 17 per cent of investors are considering a move likely to a regional area due to the COVID-19 pandemic, PIPA said.
Most of them were looking at regional towns in NSW at 21 per cent, Queensland at 18 per cent and Victoria at 14 per cent.
“It’s no surprise that COVID19 and made many people reconsider their lifestyles,” Mr Koulizos said.
“The main reasons for doing so were improved lifestyle factors (78 per cent), working from home in the future (46 per cent) and housing affordability (40 per cent).”
Tony Ibrahim, RateCity, 15 September 2020