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Property investors bullish despite short-term white noise

Friday, 31st Mar 2017
Categories: Market News, Newsletter

Despite concerns over potential property price bubbles, oversupply issues and cyclical downturns, Australian property investors remain bullish with 1 in 2 investors aiming to grow their portfolios in the near term, according to Momentum Wealth’s annual investor survey.

The national survey of 444 property investors found that 53% of respondents said their main goal right now was to either buy an investment property in the next 12 months or develop an investment property in the next 24 months.

This bullish outlook comes despite apparent concerns in many markets whether it be a potential price bubble in Sydney, an oversupply issue in Brisbane, a cyclical downturn in Perth or doubts over the sustainability of price growth in Melbourne.

Momentum Wealth managing director Damian Collins said such issues were always going to be present with the cyclical nature of property markets but investors could still find good buys with adequate research and the right strategy.

“Successful investors who build large property portfolios understand the cyclical nature of property markets and take a long-term view when making their investment decisions,” Mr Collins said.

“This approach allows them to put short-term white noise into context, adapt to the prevailing conditions and continue to grow their property portfolios to reach their investment goals as soon as possible.”

Sydney and Melbourne out of favour with locals

While over a quarter of respondents thought Sydney and Melbourne were the best locations to buy an investment property, it seems these capital cities are out of favour with locals.

Just 23% of participants from New South Wales and Victoria believe now is a good time to buy an investment property in their respective capital cities.

On the other hand, 53% of respondents from Western Australia believe that now is a good time to buy an investment property in Perth, while 50% of respondents from Queensland think that it’s a good time to buy an investment property in Brisbane.

“Analysis from our research department shows that Brisbane, Perth and Melbourne offer plenty of good opportunities for property investors – Brisbane for its relative affordability, Perth as it nears the bottom of a down cycle and Melbourne because the current upcycle still has some way to go in selected areas” Mr Collins said.

“However Sydney remains highly overheated and we would caution anyone considering buying in this market to approach any investment there with high caution,” Mr Collins said.

Investment fundamentals still unknown to many

The survey also revealed that established houses were the most appealing property type, according to respondents, followed by development sites and syndicates.

The third most appealing property type was house-and-land packages, which placed ahead of apartments/flats (fourth) and villas (fifth).

“It was surprising to see house-and-land packages as the third most appealing property type and it shows that many investors still don’t understand the fundamentals of property investment,” Mr Collins said.

“While house-and-land packages are fine for lifestyle choices, as an investment they typically don’t provide the best returns because they’re usually on the urban fringe away from amenity, employment hubs and there’s a lot of surrounding supply available, all of which weigh on price performance.”

Momentum Wealth’s annual Property Investor Survey provides unique insights into the minds of Australian property investors, uncovering the latest trends and preferences of those in the market.

To download a copy of the results from the Momentum Wealth Property Investor Survey 2017, simply follow this link.