Profile of a typical property investor – most sell too soon
Research conducted by property analyst Michael Matusik has shed some light on the profile of a typical property investor in Australia.
Unsurprisingly, most are aged between 34 and 54 years of age and more than 80% of investors buy for long-term capital gain. They are also most likely to buy close to home, with 90% buying in their own state or territory, and more than 60% of those buying within a capital city, inner-city areas preferred.
Three out of five investors borrow money to invest and most of those negatively gear their properties. Mr Matusik also observes that most investors have an expectation that property values double every ten years and anticipate a gross rental yield of more than five per cent.
When it comes time to sell, about 25% of investors decide to sell within 12 months of purchase and 50% sell within five years. Reasons for selling vary. About one-third of investors sell because they need the money, a quarter due to feeling they’ve received disappointing capital growth, 20% because of low rental returns, and one in six because they believe it’s simply too much hassle.
It’s worrying that while the majority of investors understand that property is a long term investment, and buy with the intention of realising long term capital gains, 75% will sell within the first five years – the exact time the investment begins to realise significant wealth.