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.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
LIMITED TIME OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
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Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
VariableMore details
AN EASY ONLINE APPLICATION

Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
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  • Optional 100% offset can be added for $120 p.a.^
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Yard Home Loan (Principal and Interest) (Special) (LVR < 70%)

  • Unlimited additional repayments
  • Unlimited free redraws
  • Optional 100% offset can be added for $120 p.a.^
FixedMore details
NO UPFRONT OR ONGOING FEES

Basic Home Loan Fixed (Principal and Interest) (LVR < 70%) 3 Years

NO UPFRONT OR ONGOING FEES

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. Rates correct as of October 19, 2021. 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 2020. They are (in descending order): Great Southern Bank, 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 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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, Performance Drive 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.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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