Are you planning to buy an investment property in 2021?
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%
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.
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...
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.
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.)
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.
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.
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- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 28th, 2023
24% of respondents plan to buy a new home in 2021.
In previous surveys this figure has been 20% for the last 3 years.
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?
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.
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.
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.
A perfect storm is brewing for our property markets in 2021-22, and you can trust the team at Metropole to provide you with direction, guidance and results.
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