Property policies swayed investor voters in the election

William Jolly By on October 3, 2019
 
canberra property investors

Image: Red Hill, Canberra (Steve Bittinger on Unsplash)

As many as 75% of property investors said that property policies in the Federal Election influenced how they voted, new research has found.

The Property Investment Professionals of Australia (PIPA) Investor Sentiment Survey surveyed 1,200 property investors, and found they are “demonstrably more positive” about the market compared to the same time last year.

This is despite slow markets in Sydney and Melbourne and the tight credit environment.

The big reasons for the positive sentiment, according to the survey, is the lack of changes to negative gearing and capital gains taxation.

According to PIPA Chairman Peter Koulizos, Labor’s proposed changes to negative gearing and capital gains tax – where they proposed to limit negative gearing to new housing and halve the capital gains discount – heavily influenced the way that three-quarters of investors voted in the recent Federal Election.

“It’s clear that many investors, regardless of their political leanings, were fed up with being told they were ‘greedy’ when the vast majority only own property and are just trying to improve their financial futures,” Mr Koulizos said.

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Purchase or Refi, P&I 80% Smart Home Loan 2.88% 2.90% $1,660 More details
Low Rate Home Loan w/Offset 2.90% 2.92% $1,665 More details
Base Variable Rate Special P&I 3.20% 3.20% $1,730 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Purchase or Refi, P&I 80% Smart Home Loan
2.88% 2.90% $1,660
More details
Low Rate Home Loan w/Offset
2.90% 2.92% $1,665
More details
Base Variable Rate Special P&I
3.20% 3.20% $1,730
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%. 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 18 November 2019. View disclaimer.

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Property investors not deterred

Despite the looming threat of a continued slide in house prices, property investors are still focused on the long-term merits over short-term losses.

Some 78% of respondents said potential falls in house prices wouldn’t cause them to put their investment goals on hold, with 82% saying now is a good time to invest.

“Long-term capital growth beat out cash flow – both long- and short-term – as the most important aspect when choosing an investment,” Mr Koulizos said.

“When asked why they choose to invest, the most important reason was to provide a better life financially for themselves and their family, while the idea of ‘becoming rich’ was one of the least important reasons.

“The majority of investors are also confident in their local market because when asked the direction of the property market in their state or territory, 53% said it was improving while 41% said it was flat.”

The recent CoreLogic Home Value Index for September suggested the recent slide in property prices may have bottomed, with the national median dwelling value rising by 0.9%: the largest monthly gain since March 2017.

This was largely driven by strong growth in Sydney and Melbourne, where values were up by 1.7%.

Source: CoreLogic

Investors now looking outside the major banks

According to Mr Koulizos, restricted access to lending has caused more investors to look to smaller lenders, such as non-banks, over the big four banks.

“Difficulty obtaining finance, as well as the popularity of banks being on the slide over the past year, meant that about 60% of investors are now more likely to consider a non-major bank lender, especially after the outcomes of last year’s Banking Royal Commission,” he said.

The survey found that 27% of investors had secured a loan from a non-major bank lender over the past year, with cheaper interest rates and increased borrowing power cited as the key reasons why.

“Given tight lending conditions and the financial sector’s response to the Banking Royal Commission, a staggering 25% of respondents have found they were unable to refinance an amount they were able to borrow previously,” Mr Koulizos said.

“This situation is potentially one of the reasons why the number of investors in the market has fallen dramatically – with 34 per cent of investors purchasing a property over the past 12 months, down from 43 per cent in the 2018 survey.”

Building society and credit union (aka customer-owned banks) customer satisfaction is eclipsing that of the big banks.

New Roy Morgan research shows just under 90% of customer-owned bank customers declared themselves satisfied over the last six months, compared to 77% of big four banking customers.

Newcastle Permanent took the top gong for monthly banking satisfaction for each month so far this year, having a satisfaction rating of 92%.

CUA (91%) and People’s Choice Credit Union (88%) come second and third respectively.

Provider Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
 
Real Deal OO Special <90% 3.19% 3.23% $1,728 More details
Real Deal OO Special >90% 3.46% 3.50% $1,787 More details
Real Deal Inv Special <90% 3.46% 3.50% $1,787 More details
Real Deal Inv Home Loan 4.44% 4.48% $2,013 More details
Ad rate
p.a.
Comp rate*
p.a.
Monthly
repayments
Real Deal OO Special <90%
3.19% 3.23% $1,728
More details
Real Deal OO Special >90%
3.46% 3.50% $1,787
More details
Real Deal Inv Special <90%
3.46% 3.50% $1,787
More details
Real Deal Inv Home Loan
4.44% 4.48% $2,013
More details

Base criteria of: a $400,000 loan amount, variable P&I home loans. Introductory rate products were not considered for selection. This table includes only a snapshot of the lender’s products, not all of them. 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 19 November 2019.

Roy Morgan CEO Michele Levine said building societies and credit unions consistently outperform the major banks when it comes to customer satisfaction.

“While the disturbing revelations of the Banking Royal Commission saw satisfaction with the Big four banks drop to a low of 75% in October 2018, Building Societies and Credit Unions never dipped below 87%,” Ms Levine said.

“Their challenge is to try to capitalise on this excellent scorecard to gain an increased share of business.”

The latest Quarterly ADI Statistics released by the Australian Prudential Regulation Authority show the customer-owned banking sector’s housing loans grew by 7.8% to the June quarter, while the major banks grew by just 2.6%.

Customer satisfaction: Big Four vs Customer-Owned Banks (building societies/credit unions)

Source: Roy Morgan Research

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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 2018. 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.

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.

*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.

William Jolly
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.
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