Here’s what property investors will be doing in 2020

Are you planning to buy an investment property in 2020?

ForecastingOr maybe you’re planning to buy a new home?

Well you’ll be in good company because 68% of the respondents of a recent survey believe now is a good time to invest in residential real estate.

And 20% of respondents plan to buy a new home in 2020.

This is despite 43% of the respondents believing Australian property values would only increase by 0 to 5% next year.

Clearly, they are taking a long term view.

Another 18% of respondents felt real estate values would increase by 5% – 10% in 2020.

What’s all this about?

Recently Property UpdateYour Investment Property Magazine and onthehouse.com.au polled their readers and over 1,800 property investors and would be investors gave their input to the 2019 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.

You can download the full survey findings by clicking here, but for the moment let’s look at some of the highlights.

Who took part in the survey?

A wide range of Australians – 1,796 ordinary mums and dads responded.

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

When asked for their combined family income 2% earned less than $50,000 while 29% earned more than $200,000 but the bulk earned a combined family income between $100,000 and $200,000.

89% owned at least one investment property, but a wide spectrum of investors partook in the survey:

  • 11% owned no investments
  • 22% owned one investment property
  • 21% owned two investment properties
  • 15% owned three investment properties, and it went all the way up to
  • 4% owning 10 or more properties

Some surprising results:

  • 19% of respondents were rentvestors (rent their home but own an investment property, and 48% of the respondents would consider rentvetsing as a way of getting into the property market.

ARE YOU A RENTVESTOR?

While 68% of respondents believe now is a good time to invest (up from 52% in 2018 and 59% in 2017), only 42% of respondents said they were planning to buy an investment property in the next year.

RentvestingInterestingly this is the same percentage as last year.

I would have thought the more buoyant market conditions would have increased the number planning to invest.

20% of respondents (down a little from 23% last year) were unsure if it was a good time to invest in real estate.

I guess they’re a little spooked by all the negative news.

IS THIS A GOOD TIME TO INVEST IN REAL ESTATE?

A1

20% of respondents plan to buy a new home in 2020.

This figure has remained much the same for the last few years.

A2

While 19% of respondents plan to seek advice from a property strategist or an advisor, I found find it surprising that 32% will seek no advice on their next property purchase.

Consultation And Conference Of Professional Businesswoman And Male Lawyers Working And Discussion Having At Law Firm In Office. Concepts Of Law, Judge Gavel With Scales Of JusticeThis 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 males and females we found it interesting that of the 1,796 people who responded 74% 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:

  • Investors are more confident about our property markets. 61% of respondents see property values rising next year, while this time last year 84% of respondents expected property values to fall over the year.

A3

  • Only 30% of the respondents felt it was time to lock in interest rates (down from 40% last year), suggesting that most feel interest rates will fall further.
  • 42% of respondents are finding the recent tighter lending criteria impacting their ability to purchase another property.
    Interestingly this is considerably lower than the last few years (2018 – 50%; 2017- 48%; 2017 – 46%) suggesting that banks’ lending criteria are easing a little.
  • Melbourne (39%) was seen as the most likely capital city to deliver strong capital growth over the next 5 years followed by Brisbane (39%.) Note: the numbers in the chart below add up to more than 100% as multiple answers were allowed for this question.

A4

  • A detached house in the inner and middle ring suburbs of a capital city was seen as the best medium term investment (36%) while 25% will be looking for a property with the potential to add value. Clearly off the plan properties are out of favour with less than 1% believing they make good investments.

A5

  • 35% of these investors saw an opportunity to “manufacture” capital growth by purchasing property with renovation or development potential. This is down a little from the same as last year (42%).

The bottom line:

It’s clear that property investor confidence is strong and those who can afford to are planning to take advantage of this new property cycle, buying another investment property or new home if finances allow.

Long TermOur survey shows that Australians property investors focus is on long-term capital growth, rather than cash flow and many are looking for a property that has potential to add value, rather than waiting for the market to do the heavy lifting.

Despite hopeful plans for the upcoming year, investors still face a few hurdles preventing them from purchasing more investment properties, in particular the banks’ tighter lending serviceability criteria.

40% of those surveyed said tighter bank lending policies to investors affected their ability to purchase another property.

26% also cited difficulty with loan serviceability as another factor that hinders them from buying their next investment.

Click here to read the full survey results.

If you’re looking at buying your next home or investment property here’s 4 ways we can help you:

Sure our property markets are improving, but correct property selection is even more important than ever, as only selected sectors of the market are likely to outperform.

Why not get the independent team of property strategists and buyers’ agents at Metropole to help level the playing field for you?

We help our clients grow, protect and pass on their wealth through a range of services including:

  1. Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now! Click here to learn more
  2. Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management – Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


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