Property

Here’s what property investors plan to do in 2018

Michael Yardney /

Are you planning to buy an investment property in 2018? Or maybe you’re planning to buy a new home?

Well you’ll be in good company because around half the respondents of a recent survey intend to buy another investment property in the next 12 months, and 23% are planning to buy a new home.

This is despite the fact that 64% of respondents believe property prices will remain flat, or increase by less than 5% over the next year.

What’s all this about?

In November, Property Update and Your Investment Property Magazine polled their readers. In response, 2,250 property investors and would-be investors gave their input to the 2017 Property Investor Sentiment Survey, the largest and longest running survey of its type in Australia.

Running since 2011, it offers rich and vibrant insights into how property consumer trends and sentiments have changed over time.

Who took part in the survey?

A wide range of Australians – 2,250 ordinary mums and dads responded.

The fact they already subscribed to Property Update or Your Investment Property Magazine meant we had a captive audience of people already interested in property.

When asked for their combined family income 3% earned less than $50,000 while 2% earned more than $250,000 but the bulk earned a combined family income between $100,000 and $200,000.

90% owned at least one investment property, but a wide spectrum of investors partook in the survey:

  • 10% owned no investments
  • 19% owned one investment property
  • 20% owned two investment properties
  • 15% owned three investment properties
  • 7% owned 10 or more properties

Some surprising results

24% of respondents plan buy a new home in 2018. This is up considerably from 14% 12 months ago. This is probably because some will take advantage of the First Home Owner’s Grants currently available.

Despite our property markets moving to the next phase of the cycle and property price growth slowing down, 61% believe now is a good time to buy property and one in two (51%) respondents plan to buy another investment property in the next 12 months. Interestingly this is much the same as 12 months ago (52%).

While 26% of respondents plan to seek advice from a property strategist or an advisor, we find it surprising that 25% will seek no advice on their next property purchase. This is a concern because, despite the significant amount of research material and information available for free, there’s one thing you can’t get over the internet – and that’s the perspective that only comes after years of on the ground experience.

While our readership is reasonably evenly split amongst men and women we found it interesting that of the 2,250 people who responded 73% were male. Now that’s interesting and you can read whatever you want into that statistic. Pam, my wife, said that it’s because males have been trained to do what they’re told – but I’m not sure about that.

Some not so surprising results

Melbourne was seen as the most likely capital city to deliver strong capital growth over the next five years (52%), closely followed by Brisbane (45%). These are the same two growth capitals that readers suggested 12 months ago and in virtually the same proportions (50% Melbourne and 45% Brisbane).

  • More than three quarters would buy a property with land – a house, townhouse or villa unit. Apartments (9%) are out of favour at present – and not surprisingly so — as house price growth is significantly outperforming apartments in most capital cities
  • 42% of these investors saw an opportunity to “manufacture” capital growth by purchasing property with renovation or development potential.
  • Around half of the respondents reported that the recent changes to lending policy have impacted their ability to purchase another property, while 36% say meeting the banks stricter serviceability criteria will be their biggest stumbling block to purchasing a property.
  • However, they are realistic they won’t enjoy quick and massive capital growth in the near future, but they still intend to buy more property in the next year.
  • 64% believe that property prices will remain flat, or increase by less than 5%, over the next year. Clearly those planning to invest are taking a long term view.

The bottom line

It’s clear property investor confidence is still strong and those who can afford to are planning to remain as active as ever, buying another investment property or new home if finances allow, despite the fact that the boom is now well and truly over and strong capital growth isn’t widely anticipated in 2018.

This shows Australians property investors focus is on long-term capital growth, rather than an immediate equity boost, while many are looking for a property that has potential to add value, rather than waiting for the market to do the heavy lifting.

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Michael Yardney

Michael Yardney is a director of Metropole Property Strategists, which creates wealth for its clients through independent, unbiased property advice and advocacy. He is a best-selling author, one of Australia's leading experts in wealth creation through property and writes the Property Update blog.

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