By Michael Yardney December 25, 2020

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Here’s what property investors will be doing in 2021

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Here’s what property investors will be doing in 2021

Are you planning to buy an investment property in 2021?

Forecasting Or maybe you’re hoping to buy a new home?

Well you’ll be in good company because 74% of the respondents of a recent survey believe now is a good time to invest in residential real estate (significantly more than the 68% last year.)

And 24% of respondents plan to buy a new home in 2021 (up from 20% last year.)

Clearly, they are taking a long term view as the respondents our annual Property Investor Sentiment Survey have realistic expectations of what's likely to happen to property values next year.

29% of the respondents believing Australian property values would only increase by 0 to 5% in 2021
19% believe values will remain steady next year
12% believe property values will increase between 5-10% next year
12% think property values will decrease 0-5% next year
9% see a bigger fall coming - thinking property values could decline 5-10%, while...
5% see declines of over 10% in property values ahead and
4% think property values will increase over 10%

What’s all this about?

Recently Property Update, and Your Investment Property Magazine polled their readers and close to 1,500 property investors and would be investors gave their input to the 2020 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 – 1,496 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 35% earned more than $200,000 but the bulk earned a combined family income between $100,000 and $200,000.

88% owned at least one investment property, but a wide spectrum of investors partook in the survey:

12% owned no investments
20% owned one investment property
19% owned two investment properties
13% owned three investment properties, and it went all the way up to
5% owning 10 or more properties

Here's a snapshot of the results...

Are you a rentvestor?

18% of respondents were rentvestors (rent their home but own an investment property), and 50% of the respondents would consider rentvetsing as a way of getting into the property market.

Is this a good time to invest in property?

Respondents to the survey saw this as the best time to invest in property for a long time, with 74% believing now is a good time to invest.

This figure is up significantly from 68% in 2019, 52% in 2018 and 59% in 2017.

50% of respondents said they were planning to buy an investment property in the next year (up from 42% last year.)

How has the Covid-19 pandemic and recession affected property investors?

When asked if the Coronavirus pandemic had changed their attitude or approach to property investing the answers were:

Then we asked - "Has the pandemic impacted your immediate investment plans in the next 12 months?"

While 20% are pausing the investment plans until the situation became clearer, the majority of respondents are not going to change their plans and 14% are going to take advantage of the current climate to enter the market sooner.

In fact, 50% of the respondents were planning to buy an investment property in the next 12 months – this was the highest percentage in this annual survey over the last five years.

Only 10% of respondents had applied for a mortgage repayment holiday for either their home or investment properties because of Covid 19.

However, one quarter of the respondents had received a request for a rental reduction or holiday because of COVID-19 from the tenants

When asked whether they were considering moving to live in a different location because of COVID-19, 90% have no plans to move end of the others, only 2% considered moving to regional Australia, with Queensland being the most popular destination to make a new home.

More Australians are planning to move home in the next year

24% of respondents plan to buy a new home in 2021.

In previous surveys this figure has been 20% for the last 3 years.

Some other interesting results:

Investors are cautious about our property markets.

45% of respondents see property values rising in the next year.
Last year 61% of respondents thought property values would rise in 2020, while the year before 84% of respondents expected property values to fall over the coming year. Interestingly they were wrong each time

Almost half the respondents believe this as a good time to lock in interest rates.
Last year 30% of the respondents thought it was time to lock in interest rates (down from 40% the previous year), suggesting that most felt interest rates will fall further. And they were correct.

Do you think now is a good time to fix interest rates?

38% 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 (2019 - 42%; 2018 – 50%; 2017- 48%; 2016 - 46%) suggesting that banks’ lending criteria are easing a little.
Difficulty with loan serviceability was seen as the biggest stumbling block to further investments

Brisbane (42%) was seen as the most likely capital city to deliver strong capital growth over the next 5 years followed by Melbourne (39%.)
Note: the numbers in the chart below add up to more than 100% as multiple answers were allowed for this question.

Clearly off the plan properties are out of favour with respondents keen to buy established properties, and in particular those with the ability to add value through renovation or development.
What type of property are you planning to buy?

Who’s advice do you seek (or plan to seek) for property investment advice?

While 41% of respondents plan to seek advice from a property strategist or an advisor, I found find it surprising that 24% 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 Justice 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 at Property Update is reasonably evenly split amongst males and females we found it interesting that of the 1,496 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.

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 Term

In fact, a larger percentage are responded are keen to purchase an investment property next year than in previous years despite realistic expectations of only low capital growth next year.

Our survey shows that Australians property investors focus 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.

Investors will still face a number of hurdles with the economic challenges facing Australia, yet few have changed their long-term plans due to COVID-19.

Click here to read the full survey results.

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metropole

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About Michael Yardney 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.