Are you wondering what’s ahead in property for 2023?
Maybe you’d like to know what other Australian property investors plan to do.
Well, that’s exactly what we discuss in today’s show as we unpack the results of this year’s Property Investor Sentiment Survey.
You’ll hear what 1,900 Australians feel about our current real estate markets and what they plan to do.
And you’ll also hear how rising interest rates and inflation are affecting their household budgets, what they mean for their property plans, and how, if at all, it changed their strategy.
You see…these Aussies took part in this year’s Property Investor Sentiment Survey run by my Property Update newsletter in conjunction with Finder.com.au.
And you’ll find some of the findings eye-opening – I know I did – especially when I read how many investors sold up last year and the reasons why they did.
Even more curious was how many investors are planning to sell up their properties in the coming year.
And as usual, I’ll share a mindset message with you because if you can change your thinking, it could change your life.
How have rising inflation and rising interest rates affected you?
Have you had to change your lifestyle, have you sold a property, or are you considering selling because of rising interest rates?
Have the current economic conditions changed your strategy or approach to property investing?
These are some of the questions we recently asked 1,906 Australian property investors and would-be investors in our annual Property Investment Sentiment Survey conducted together with Finder.com.au, and some of the answers were enlightening.
Running since 2011, our survey offers vivid insights into how property consumer trends and sentiments have changed over time.
And to walk through these with me today is Sarah Megginson, money expert from finder.com.au.
Most of the respondents to last year’s survey were very positive about the outlook for our property markets in 2022.
Most did not foresee a war in Ukraine, rising inflation, and interest rates rising at the fastest rate they have for over 30 years.
So, it was interesting to see the change in market sentiment, before we discuss this, let’s have a look at who responded to the survey.
When asked for their combined family income, 5% earned less than $50,000 while 30% 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:
- 7% owned no investments
- 3% owned one investment property
- 9% owned two investment properties
- 8% owned three investment properties, and it went all the way up to
- 3% owning 10 or more properties
And clearly, these investors took a long-term view, with 45% investing in long-term capital growth rather than cash flow, and many are looking for a property that has the potential to add value rather than waiting for the market to do the heavy lifting.
A surprising result is that almost 1 in 3 (31%) of those who owned an investment property sold at least one property in the last year, and around 32% of property investors are considering selling a property in the next year or two.
Yet despite the continual barrage of negative media, 57.5% believe this a still a good time to invest (down from 74% last year.)
38% are planning to buy an investment property (down from 50% last year), and 21% are hoping to buy a new home in 2023 (down from 24% last year.)
Respondents were concerned about the current economic conditions, and only 57.2% thought it was a good time to invest in property.
- Only 12.7% of respondents see property values rising in the next year.
- Last year 45% of the survey respondents saw the next year (2022) as a year of rising property values, and they were wrong, while in 2020, 61% of respondents thought property values would rise the following year.
The biggest stumbling blocks to purchasing another investment property were not having enough deposit (25.1%) and difficulty servicing loans (24.6%), and not surprisingly, 39% of responders felt that rising interest rates had impacted their ability to purchase another property.
Almost 1 in 3 (31%) of those who owned an investment property sold at least one property in the last year, and around 32% of property investors are considering selling a property in the next year or two.
Surprisingly 48% of respondents felt there was no real change to the household financial situation at present, but unfortunately, 34% found their financial situation had worsened, with 12.6% having to cut back on groceries and 9.6% cancelling a holiday this year.
How much further would interest rates have to rise for you to consider selling your property?
While 34.8% were more cautious, 43.3% of respondents have not changed their approach, and that makes sense as property investment is a long-term play.
Interestingly, each year about a quarter of respondents say they won’t seek anyone’s advice before making an investment decision, and, in my mind, 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.
Our survey shows that Australian property investors focus on long-term capital growth rather than cash flow, and many are looking for a property that has the potential to add value rather than waiting for the market to do the heavy lifting.
While investors will still face a number of hurdles with the economic challenges facing Australia, few have changed their long-term investment plans due to rising interest rates and inflation.
Links and Resources:
Join us at Wealth Retreat 2023 – www.WealthRetreat.com.au
Get a bundle of eBooks and reports – www.PodcastBonus.com.au
“At the moment, everyone who wants a job has got a job; the economy’s doing well.” – Michael Yardney
“The boogeyman this year is inflation and rising interest rates, and surprisingly, 84% felt there was no real change to their household finances.” – Michael Yardney
“In my mind, the property you eventually buy should be the physical manifestation of a whole lot of decisions you’ve made in the right order, including a finance strategy, an asset protection strategy, a long-term growth strategy, a rental growth strategy.” – Michael Yardney
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