Residential property investors remain confident about the long-term prospects of the Australian property market, despite the impact of lending restrictions and the continued debate over negative gearing and apartment oversupply.
Released yesterday, the results of the Property Investment Professionals of Australia's (PIPA) second annual Property Investor Sentiment Survey revealed that 71% of the 1,000 investors surveyed believe now is a good time to invest in property, up from 63% a year ago.
According to the survey, 58% of investors are looking to secure their next property within the next six – 12 months.
“Similar to last year, most property investors are looking past short term challenges, remaining focused on the long-term wealth benefits that are available from residential real estate, including the potential for capital growth and rental income. Importantly, most investors are not speculating on quick gains in a low interest rate environment,” PIPA chair Ben Kingsley said.
Despite a small decrease, the survey shows the majority of investors regard brokers as the most important source of finance.
In the past 12 months, 65% of investors secured their last investment loan through a broker, compared to 66% over the previous 12-month period.
Seventy-one per cent of investors said their next investment loan would be sourced through a broker, while 32% said recent changes to lenders’ investment policies have affected their ability to secure finance.
“In the complex borrowing environment we are now facing, brokers continue to play a key role as providers of finance to investors. They tend to better understand the investment lending landscape and offer great choice to investors,” Kingsley said.
Interest-only loans remain a popular choice for investors, with 80% saying they would choose or refinance with a lender offering the option of an interest-only repayment period over one who didn’t, while 66% would choose or refinance to a lender if it offered the same interest rates for investors as owner-occupiers.
Investors also appear to have faith in the regulatory environment for brokers, with 89% believing that the property investment industry should be regulated in a similar manner.
“Unlike financial planning and mortgage broking, the provision of property investment advice still remains unregulated,” Kingsley said.
“PIPA is committed to raising the professional standards of this industry and will continue to lobby the government to regulate property investment advice.”
The survey’s results show just 2% of investors believe negative gearing is a key reason people invest in property, while almost half (47%) of property investors are positively geared.
Of those who are negatively geared, 63% expect they will become positively geared within five years.
“The survey also affirms that a lot of the discussion 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,” Kingsley said.