Property investors confident despite wider downturn concern

author-avatar By on May 28, 2020
Property investors confident despite wider downturn concern

Photo by Harmen Jelle van Mourik on Unsplash

A survey in May found 72% of property investors were confident about the market's short-term prospects.

The Property Investment Professionals of Australia (PIPA) and the Property Investors Council of Australia (PICA) commissioned the survey of nearly 2,000 property investors, which found investor sentiment was down only 10 percentage points from the same survey conducted in September last year.

Eighty per cent of respondents said the COVID-19 crisis had not changed their investment intentions for the next six or 12 months.

Positive sentiment is despite residential construction values falling to a near-five year low in the March 2020 quarter, according to the Australian Bureau of Statistics (ABS). 

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.

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
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Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 60%)

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Low Rate Home Loan - Prime (Principal and Interest) (Investment) (LVR < 60%)

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  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
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Yard Investment Loan (Principal and Interest) (LVR < 80%)

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Smart Investor Home Loan (Principal and Interest) (LVR < 80%)

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Smart Investor Home Loan (Principal and Interest) (LVR < 80%)

  • Option to add an offset for 0.10%
  • Fast turnaround times, can meet 30 day settlement
  • No on-going or monthly 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 17, 2021. View disclaimer.

Investors Switzer Financial Group research also revealed more than half of Australians expect property prices to fall in the next 12 months.

Other research by banks and economists predict a grim short-term future for property as well: 

Analysis by Domain also found there had been no material signs yet of distressed sales.

The PIPA-PICA survey collated responses from 13 to 24 May, with 35% of responses from NSW, 30% from Victoria and 20% from Queensland.

Forty-five per cent of respondents had an average household income of $100,000 to $200,000 annually.

"Business as usual" for property investors

PIPA chairman Peter Koulizos said the survey showed investors were "overwhelmingly" optimistic about the property market in the next year.

"Eighteen per cent [are] saying the crisis had actually made it more likely they would purchase a property over that timeframe,” he said.

“The survey results also showed about 30% of investors were more likely to buy a property in the next six to 12 months because of the pandemic."

PICA chairman Ben Kingsley said only a small percentage of respondents (5%) indicated the crisis had made it more likely that they would sell a property over the next six to 12 months.

Nearly two-thirds also said coronavirus poses no change at all to their plans.

“Most investors also indicated that they had the financial buffers to see them through the current economic uncertainty," Mr Kingsley said.

“The survey results definitively show optimism amongst investors as well as a business as usual attitude.”

The survey was conducted at the same time various property groups lobbied the Australian Government to protect the construction industry.


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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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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