Almost 70% of investors still keen to buy, Queensland the place to do it

author-avatar By on September 16, 2020
Almost 70% of investors still keen to buy, Queensland the place to do it

Photo by David Goulding on Unsplash

A new survey has revealed 67% of investors still believe now is a good time to buy residential property.

However, this was down from 82% in 2019, according to the Property Investment Professionals of Australia (PIPA) Annual Investor Sentiment Survey 2020. 

Queensland was offering the best investments prospects over the next year according to 36% of investors, followed by Victoria (27%) and New South Wales (21%). 

More investors are keen to look for regional opportunities, with 22% considering this, up from 15% last year, with coastal locations also on the rise, up to 12% from 8% last year.

Buying an investment property or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for investors.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) investment 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. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

Investors seem largely unperturbed by reports house prices could drop by 30% as a result of the pandemic, as 77% said potential falls wouldn't see them pause investment plans. 

PIPA Chair Peter Koulizos said COVID had drastically changed the investment landscape, but investor sentiment had held largely firm. 

"While there is no doubt that 2020 has been one of the toughest in living memory for everyone around the globe, property investors have remained stoic in the face of the unprecedented uncertainty that we are all experiencing," Mr Koulizos said.

"However, at the current time, the property market has continued to show its resilience with prices materially stable in most parts of the nation.

"That said, there is likely to be big changes to not only where people choose to invest, but also to where they may prefer to live in the years ahead." 

pipa2020surv1

Source: PIPA

The survey found 44% of investors were looking to purchase a property in the next six to 12 months, down from 48% in 2019.

Of those looking to invest in the next six to 12 months, 74% were interested in purchasing an established house, with the remaining distribution including townhouse/villa at 5.7%, unit/apartment at 2.0% and house-and-land package at 3.9%.

About 29% of investors purchased a property over the past 12 months, down from 34% in the 2019 survey

However, there was an increase of new investors, as of all respondents who purchased in the past 12 months, 29% purchased their first investment property in the year, up from 21% last year. 

Long-term capital growth was far and away the number one reason for investing (62%), followed by long-term rental income (26%). 

Mr Koulizos said only around 8% of investors required a mortgage deferral through COVID, with three-quarters of this number not needing to extend the original term.

A massive 92% of investors took advantage of the early superannuation withdrawal scheme. 

"While the financial challenges have been plenty over recent months, property investors have generally been able to manage their cash flows and expenses over the period," he said.

"About 16% of investors had tenants who applied for a rent reduction or holiday during the pandemic with about 47% of requests proving to be eligible under the relevant state-based legislation."


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): 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 2020) 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, 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.

*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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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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