Australia’s property investors are increasingly setting their sights on a particular type of property, which could have serious ramifications for the upcoming federal election.
According to the 2016 edition of Mortgage Choice
’s annual Investor Survey, 76.7% of Australian investors purchased established properties, rather than a new build.
That figure is up from last year’s result, with 75.8% of investors saying they purchased an established property in 2015.
Mortgage Choice chief executive officer John Flavell said the figures show that even with the huge number of new dwellings on offer, particularly apartments, it appears investors still believe established properties offer the best opportunities for growth.
“Investors are savvy, they aren’t looking to lose money on their investment. They want to invest in a property that has the potential to deliver strong capital growth and rental yields. And looking at the data, it would appear the majority of investors believe an established dwelling will help them to do just that,” Flavell said.
“Despite the fact that there is an increasing number of new properties – including new apartment blocks – coming onto the property market, it would seem as though the majority of investors feel as though an established dwelling would best suit their needs,” he said.
Flavell said the investors likely view established housing as better investment opportunities given they are more likely to be larger properties and be located near amenities.
“Investors understand that the better their premise is in terms of size and access to important amenities, the more likely they will be to attract and retain good quality tenants,” he said.
“The reality is, the vast majority of the dwellings that are attractive to potential and existing property investors are good sized, established properties.”
According to the survey, 71% of investors said their investment property was a house that boasted at least two bedrooms.
Given investors favour established properties so heavily, Flavell questioned the wisdom behind plans from Labor to restrict negative gearing to builds if they win next week’s election.
“At Mortgage Choice, we believe negative gearing plays an important role in the property market. The tax benefits associated with negative gearing helps to make property investment more attractive to some Australians.
“Given that the success and strength of the housing market is critical to the ongoing health of the Australian economy, it doesn’t make sense to consider removing any initiatives that help this market.”