Perth and Brisbane emerge as top choices for property investors
The latest Momentum Wealth Annual Property Investor Survey has shown that investor interest is continuing to shift away from the Sydney and Melbourne markets, with Perth and Brisbane emerging as the top investor preferences.
The survey, which interviewed 483 investors across Australia, showed that 36% and 33% of respondents highlighted Perth and Brisbane as the best places to invest respectively.
A combination of affordability and potential growth opportunities likely contributed to higher levels of investor interest in the capital city markets, with both markets offering strong levels of affordability compared to Sydney and Melbourne.
Both markets have also been showing positive indicators that long-term growth could be on the horizon, with Brisbane already experiencing overall price growth and areas of Perth performing strongly as the Western market enters its long-awaited recovery.
Hometown confidence hits a high in WA
Whilst Perth was considered the best place to buy amongst respondents, the survey also highlighted a considerable rise in home confidence, with an overwhelming 70% of WA investors selecting Perth as the most appealing capital city to invest in.
This marks a further 4.5% increase from last year’s survey, when the proportion of WA respondents preferring Perth spiked a staggering 29% from the year prior.
This renewed confidence is already leading to price growth in some areas, with increased activity from trade-up buyers resulting in significant price growth in Perth’s central sub-region across the past 18 months.
Lending restrictions still a barrier
Whilst investors are recognising the potential benefits of entering the market, the survey showed that lending restrictions continue to pose a barrier for entry for some, with a number of investors finding increasing difficulty in securing finance in light of recent APRA changes and the Banking Royal Commission.
The survey showed that 67% of respondents had reviewed their loans in the 12 months to November 2018, up 8% on the previous year’s results – a likely response to the challenging lending environment.
Although Australia has seen record low interest rates in recent years, many investors have been impacted by changing lending restrictions. And with many banks now raising their interest rates outside of the RBA cycle, a growing number of buyers are considering the potential benefits of fixing their loans.
Negative gearing set to impact majority
The potential changes to negative gearing proposed by the Labor government pose a further source of uncertainty for some investors, with 61% of survey respondents revealing they have a negative cash flow portfolio.
Whilst those who rely heavily on the tax benefit will need to be mindful of the impact of such changes in future, investors are urged remain to focused on the fundamentals during the property selection process, remembering that these changes are not retrospective and tax offsets only form a small portion of a property’s overall returns.
Those who are unsure of the potential impact of recent or prospective changes should seek the support of a professional and independent advisor to understand how best to capture market opportunities and mitigate investment risk.
The findings were observed from Momentum Wealth’s Annual Property Investor Survey, which captures the latest trends impacting the sentiment of Australian investors. If you would like to discuss the findings in more detail, contact a member of our team to organise an obligation-free consultation. Alternatively, download a copy of the report’s key findings to read the report in more detail.