Property market buoyed by investor demand

14 July 2014                                                                                                                             

 Property market buoyed by investor demand

While investment market growing, percentage of individual investors shrinking.

 

Australian property investors continue to dominate the market, with the percentage of investors eclipsing 30 per cent.

 

According to new research conducted by Mortgage Choice, investors currently account for just over 30 per cent of all new loans written – significantly higher than the 27 per cent recorded just 12 months ago.

 

Local Mortgage Choice franchise owner Des Nation said it is unsurprising to see a spike in investor activity as, according to the company’s latest First Time Investor survey, this type of buyer not only sees property as a lucrative investment, but as a way to future proof their wealth.

 

“In Mortgage Choice’s recent First Time Investor survey respondents were asked what their key motivators were for buying an investment property and almost 76 per cent of New South Wales respondents said they would purchase an investment property to set themselves up financially for the future,” Mr Nation said. 

 

“In addition, 58.3 per cent of first time investors in NSW said they see more benefit in investments such as property, than they do in the share market.”

 

“This sentiment suggests people feel very confident about the Australian property market and believe there are many benefits associated with owning an investment property. In fact, 47.1 per cent of NSW respondents said buying an investment property would help them prepare for retirement.”

 

Mr Nation said it is good to see Australians taking the right attitude towards property investment.

 

“First time investors do not see property investment as a quick win, but as part of their long-term financial strategy,” he said.

 

But while investor activity as a whole is on the rise, it seems rising property prices are making it harder for NSW investors to buy alone.

 

According to the data, just 29.9 per cent of NSW first time investors said they would purchase an investment property by themselves.

 

Mr Nation said rising property prices were largely to blame for the fact that NSW first time investors are purchasing alone.

 

“Research from RP Data shows property values climbed, on average, 15.4 per cent across Sydney over the 12 months to July 2014,” he said.

 

“Because of this, it has become harder for individuals to save a deposit and jump onto the property ladder alone.”

                                  

If you would like help with possibly investing in property you may wish to attend a BlueWealth Property seminar being held at Penrith RSL on Tuesday 5th August 2014, to find out further details or to learn more about your home loan or financial advice options, call (02) 9833 8177 or visit www.mortgagechoice.com.au/Des.Nation


Table 1: Key motivators

 

What are the key motivators behind your investment property purchase?

National

NSW

VIC

QLD

SA

WA

My parents' success/experience with property investments

15.2%

13.7%

17.3%

11.8%

18.5%

14.5%

I don’t wish to own my own home but I see the benefit in having an investment property/ies

5.2%

3.4%

3.0%

5.4%

7.9%

5.5%

I’m not ready to own my own home but want to get a head start in the market

8.2%

8.8%

5.4%

5.9%

11.6%

9.5%

I see more benefit in investments such as property, than I do in the share market

58.4%

58.3%

54.0%

56.9%

58.8%

64.5%

I have researched the property market and feel property investment will enable me to achieve my financial goals sooner/better

32.4%

30.9%

37.6%

34.8%

25.0%

33.0%

Tax benefits

57.3%

59.8%

63.9%

62.7%

50.0%

51.0%

Advice received from family, friends or a financial advisor

23.3%

22.5%

19.8%

22.1%

26.9%

24.5%

Reading and/or hearing of others’ success

15.0%

10.8%

14.9%

12.7%

19.0%

17.5%

Capital gain

33.2%

38.2%

34.7%

37.7%

29.6%

25.5%

Negative gearing

35.9%

39.7%

44.1%

31.9%

31.9%

33.0%

Positive gearing

5.5%

6.9%

4.0%

4.9%

5.6%

4.0%

I want to set myself up financially for the future

78.9%

76.0%

78.2%

78.9%

82.4%

81.5%

Pressure from family/my partner

5.5%

8.8%

4.5%

3.9%

6.5%

4.5%

Building a portfolio to hand on to beneficiaries

20.0%

18.1%

20.8%

19.6%

20.8%

18.5%

Potential rental yields I can get

24.9%

28.9%

18.3%

24.0%

21.3%

31.0%

To diversify my asset portfolio

23.5%

21.6%

28.7%

25.5%

19.4%

23.5%

I can’t afford to buy the home I want so I’m taking the first step with an investment property

6.9%

3.9%

5.4%

6.9%

10.2%

8.0%

To plan for my retirement

48.1%

47.1%

42.6%

52.9%

50.9%

48.5%

Other

2.6%

2.5%

3.0%

1.5%

3.7%

2.0%

 

Table 2: Purchase Decisions

Who will you buy your investment property with?

National

NSW

VIC

QLD

SA

WA

Alone

24.6%

29.9%

20.3%

21.6%

25.9%

25.0%

Partner/ Spouse

69.3%

63.2%

74.8%

71.6%

69.5%

68.0%

Friend(s)

0.8%

1.0%

0.5%

1.0%

0.0%

1.5%

Property syndicate

0.4%

1.0%

0.0%

0.0%

0.5%

0.0%

Work colleague(s)

0.2%

0.0%

0.0%

0.5%

0.0%

0.5%

Sibling

1.8%

1.5%

2.0%

2.9%

0.0%

3.0%

Other family member

2.8%

3.4%

2.4%

2.0%

4.1%

2.0%

Other

0.1%

0.0%

0.0%

0.5%

0.0%

0.0%

 

For further information or to arrange an interview, please contact:

Des Nation

Mortgage Choice

0412 709 700

Des.Nation@mortgagechoice.com.au 

 

 

About the Survey

Market research company Nine Rewards was commissioned by Mortgage Choice to conduct the 2014 First Time Property Investors Survey. The online Survey was conducted in late May 2014 and completed by 1,047 Australians who were planning to purchase their first investment property in the next two years or recently purchased their first investment property.

 

Important information

This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the advice, consider its appropriateness to your circumstances.

 

About Mortgage Choice

Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs.

Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.

Since that time, the company has grown and developed into a fully fledged financial services provider.

Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance.

Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers.

Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).

Mortgage Choice holds an Australian Credit Licence: no. 382869 and Mortgage Choice Financial Planning Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.

Recent recognition: 2013, 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social Responsibility Program; 2012 Australian Broking Awards Best Training and Education;   No.1 on The Adviser magazine’s 2012, 2011, 2010 and 2009 Top 25 Brokerages list; 2012, 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list.

Visit www.mortgagechoice.com.au or call customer service on 13 77 62.

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