Quarter of Aussies see now as the best time to buy an investment property

author-avatar By on October 26, 2020
Quarter of Aussies see now as the best time to buy an investment property

Photo by s2 art on Unsplash

Despite the financial fallout of the pandemic this year, a good chunk of Australians still believe the time is nigh to invest in property.

New research by ING surveying over 2,000 Australians found there is still some positive feeling about the property market. 

According to the research, over a quarter (26%) of Australians believe now is the best time to enter the investment property market, and 44% still see property as a strong investment option. 

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

Lender
Advertised rate Comparison rate Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval
VariableMore details
GET A FULL OFFSET ACCOUNT FOR NO EXTRA COST

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

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
GET A FULL OFFSET ACCOUNT FOR NO EXTRA COST

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

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
VariableMore details
AN EASY ONLINE APPLICATION

Yard Investment Loan (Principal and Interest) (LVR < 80%)

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
AN EASY ONLINE APPLICATION

Yard Investment Loan (Principal and Interest) (LVR < 80%)

  • No application fee
  • Unlimited additional repayments
  • Unlimited free redraws
VariableMore details
  • For a chance to win $100K towards your home loan, apply with Athena before Oct 31 & be approved by Dec 15
  • The more you pay down your loan, the more we’ll lower your rate
  • Athena charges zero fees
VariableMore details
FREE REDRAW FACILITY

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
FREE REDRAW FACILITY

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 September 25, 2021. View disclaimer.

This number is higher among millennials (50%), with low interest rates (32%) and the prospect of lower house prices (27%) among the key reasons for the desire to buy an investment property. 

With many Aussies saving more (37%) and spending less (40%) during the pandemic months, ING Head of Home loans Julie-Anne Bosich said Aussies are cautiously thinking about ways to invest to take greater control of their financial future. 

“While, understandably, not everyone is in a position to use their finances to invest, our research has found that for those who are, the preferred investment choice is property, especially in the current climate where interest rates are at a record low," Ms Bosich said. 

House prices on fifth straight month of decline 

This keenness to buy an investment property coincides with yet another month of house price declines in September. 

CoreLogic found that despite prices improving marginally in most capital cities, Sydney and Melbourne, which account for 40% of the housing stock and 55% by value, dragged the national median house price down for the fifth straight month

CoreLogic Head of Asia Pacific Research Tim Lawless, said Melbourne remains the main drag on the headline results. 

“By far the weakest result across the capital cities, Melbourne housing values were down 0.9% in September," Mr Lawless said.

"Since peaking in March, Melbourne values are down 5.5%. With restrictions starting to lift and private home inspections once again permitted, we expect to see activity lift in October.”

As restrictions in Melbourne are now starting to ease, listings there have skyrocketed

After Premier Daniel Andrews' announcement on September 28 that private real estate inspections would be allowed, CoreLogic also found the number of new property listings added to the market for sale increased by 330% in the four weeks ending 18th October.

"After months of restrictions, pent-up demand from sellers has accumulated so much, that more stock was recently added for sale in Melbourne than any other capital city region," CoreLogic Head of Australian Research Eliza Owen said.

ING's research found Melbourne is in fact the most sought after destination for these would-be buyers. 

28% of investors are planning to buy in Melbourne, followed by Sydney (24%), Brisbane (17%), and the rest of New South Wales (16%).

Of NSW residents, 42% are also considering buying outside of Sydney.

Investing on the rise 

The number of investor loans issued nationwide fell to its lowest level since 2002 in May, according to the Australian Bureau of Statistics (ABS).

The latest data from the ABS for August 2020 shows a 9.3% monthly gain, indicating investors may be returning to the market, although investment levels are still 4.6% down year-on-year. 

Low interest rates are a factor for 32% of the would-be investors surveyed by ING, and with the cash rate set to be cut again by the Reserve Bank next month, interest rates on both investment and owner-occupier home loans look set to fall further. 

[Read: Which lenders offer home loan interest rates that start with a '1'?]


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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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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