Property Investor Confidence Remains High

Despite tightened lending conditions, the prospect of price bubbles, and pockets of oversupply, Australia’s property investors remain bullish about the long-term benefits of residential real estate, according to the Property Investment Professionals of Australia’s (PIPA) Annual Investor Sentiment Survey 2017.

The national survey, which gathered insights from 742 investors, indicated that the majority of investors (70%) believe now is a good time to invest in residential property. Meanwhile, 61% are looking to purchase a property in the next six to 12 months (up from 58% in 2016).

However, concerns over ongoing changes to investor lending policies are dampening prospects, with 43% of respondents reporting an adverse impact in their ability to secure finance, compared to 32% last year.

Rising interest rates on interest-only loans are also a key concern, though more than half (55%) of investors with interest-only loans said they would not struggle to meet new principal-and-interest repayments.

Slightly more than half (52%) of respondents are currently negatively geared, with the majority (62%) of these expecting to become positively geared within five years.

“It has been an eventful time for residential property investors since we published our last survey in 2016,” said Ben Kingsley, chair of PIPA. “Similar to last year, most property investors are looking past short-term challenges and are remaining focused on the long-term wealth benefits that are available from residential real estate.

“The survey also affirms that a lot of the speculation about negative gearing misses the mark. Most investors understand that negative gearing is only a short-term cash flow position, not a property investment strategy. And only a very small minority are attracted to real estate for these tax concessions.”