Australian investors dumping property in favour of stocks

author-avatar By on May 29, 2020
Australian investors dumping property in favour of stocks

Photo by Adam Nowakowski on Unsplash

New research shows Australians would prefer to invest in the sharemarket than property at the moment.

The second iteration of Switzer Financial Group's "Switzer Fear, Greed & Hope survey" shows over half of Australians (62.8%) surveyed would prefer to invest in stocks over property, term deposits and other investments. 

The same number (62.8%) of stock investors believe now is a good time to invest in the sharemarket. 

Switzer Financial Group Director Peter Switzer said the results fly in the face of Australia's obsession with property.

"Even though Aussies are often portrayed as addicted to property, the coronavirus crash has seen 63% of those investors surveyed prefer stocks, while only 10% think bricks and mortar looks attractive," Mr Switzer said.

"And those so worried that they only want to invest in government-guaranteed bank term deposits numbered 10%, which suggests 90% aren’t spooked by the coronavirus economic threats."

The survey found that 54% of the 3,000 respondents think property prices will fall in the coming 12 months, compared to 66% who think share prices are on the way up.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Provider
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Budget Home Loan OO P&I
2.68% 2.74% $1,618 Go to site
2.89% 2.89% $1,663 More details
2.39% 2.40% $1,558 More details

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Introductory rate products were not considered for selection. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term. Rates correct as at 08 July 2020. View disclaimer.

According to the survey, 37.4% of investors believed the stock market would crash in 2021 when surveyed in February.

Now, 40.7% believe the stock market will crash in 2025 or later. 

When asked what stocks they would invest in, Australians said they think CSL and Macquarie Group are the stocks that will perform best over the next 12 months. 

“This shouldn’t really be surprising as both these companies are world class and serious export-income earners," Mr Switzer said. 

"But it indicates that so-called ‘mums and dads’ (or retail) investors are becoming more sophisticated analysts of the share market.

"I suspect the combination of online trading and the escalation of financial education, especially around stock market trading, have created a smarter group of retail investors who might have ‘eaten the lunch’ of the smarties who run funds."

The survey found that 39.8% of respondents said they haven't changed their investing strategy due to COVID-19, while 38.7% have become more conservative and 21.5% have become more aggressive as a result. 

Bank stocks have surged this week, with shares in NAB up +4.7%, followed by ANZ (+4.5%), Westpac (+4.4%) and Commonwealth Bank (+2.2%). 

Similar gains were seen in smaller banks, with shares in Bendigo and Adelaide Bank up +4.1%, Bank of Queensland (+2%), Macquarie (+1.6%) and AMP (+2.7%).

“This great move up for stocks out of the bear market is a welcome trend that tells us that there’s an expectation that our economic future is looking miles better today than it did one, two and six weeks ago,” Mr Switzer said. 

The survey featured more than 3,000 respondents made up of middle and mature aged investors who are either full-time workers or retirees.

It should be noted that the majority of this database prefer to invest in stocks.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2019) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au and loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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author-avatar
Emma joined Savings.com.au as a Finance Journalist in 2019. She is a journalist with more than five years experience across print, broadcast and digital media, with previous stints at Style Magazines, 4ZZZ radio, and as editor of The Real Estate Conversation. She's most passionate about improving the financial literacy of young women and millennials by writing about complex financial topics in a way that's easy for the average Joe (or Jill) to understand. When she's not writing about finance she's watching Greys Anatomy (again).

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