A new survey has revealed that the distance between where investors live and where they buy property has doubled since the pandemic.
The research, compiled by MCG Quantity Surveyors, showed that the average distance rose from 294km to 559km between January 2020 and November of 2021, laying bare how much more willing investors have been to buy sight unseen, as well as the extent of the rentvesting trend.
“The quintessential idea for investors was that they bought around the corner from where they lived, because people were more familiar with the market that they lived in,” explained Mike Mortlock, managing director of MCG.
“In the course of collecting the data that we needed to do tax depreciation schedules, we came across some interesting questions, and of course, we get the address of the investor and the address of the investment property.
“The original edition of the study was 2019, where we found that the average distance between where an investor lives and where they invest was 293km.
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“That told an interesting story in and of itself, because we found that 60% of people are buying within 50km of where they live, but also that almost 30% are buying further than 250k away.
“We thought 200km was about the max in terms of them physically inspecting it themselves, and if we were going more than that, the chances are that they’re using a buyer’s agent or someone else on the ground.
“The motivation for redoing the study was to model the impacts of the pandemic. The data sample for this set starts from the beginning of the pandemic all the way through to November this year.
“It was a fair indication of the true changes that the pandemic has had on investor behaviour. Of course, we saw that the average distance that people bought from where they live almost doubled, to just under 560km.
“The most interesting stat was that the percentage of people buying more than 200km away rose from 29.5% to 44.65%, so we’re certainly seeing in this data that investors are much more interested in buying further afield.”
Rentvesting trend kicks in as buyers go sight unseen
While the obvious reading of the data is that investors are now more willing to buy sight unseen, it also could be seen as displaying that those living in Melbourne and Sydney, where property prices have risen to the point where many are priced out, are now sinking their cash into more affordable regions.
“What we saw in the study is that Queensland is the most popular investment state, with 37.4% of people in the study purchasing there. NSW was 34% and Victoria was only 11%,” said Mortlock.
“To me, it tells a bit of a story, because you wouldn’t say that NSW is cheaper than Victoria, though maybe there is more of a regional contingent by virtue of it being a bigger state.
“But what is part of it is that a quarter of investors actually occupy the property prior to renting it out.
“Though it is what I would call poor property investing advice, people are purchasing investment properties with a dual notion in their heads that they may occupy it later down the track, that they might retire there or use it as a destination.
“That speaks to Queensland by virtue of how well it has done during the pandemic from a lockdown perspective. Victoria is the most locked down place on Earth, and it has 11% of people purchasing compared to 37% in Queensland.”