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 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.

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): 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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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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