Here’s what property investors will be doing in 2019

Are you planning to buy an investment property in 2019? Or maybe you’re planning to buy a new home?

Well, you’ll be in good company, because more than half the respondents of a recent survey believe now is a good time to invest despite the fact the vast majority of respondents (84%) believe that property prices will fall or remain flat over the next year.

Clearly, they are taking a long-term view. In fact, 19% of respondents plan to buy a new home in 2019.

What’s all this about?

In November, property investors and would-be investors participated in the 2018 Property Investor Sentiment Survey.

A wide range of Australians responded, including 1,802 ordinary mums and dads.

When asked for their combined family income, 3.4% earned less than $50,000 while 26% earned more than $200,000, but the bulk earned a combined family income between $100,000 and $200,000.

Interestingly, of those who responded:

• 12% owned no investment properties;
• 25% owned one investment property;
• 19% owned two investment properties;
• 15% owned three investment properties; and
• 5% owned 10 or more properties.

Some surprising results

While only 19% of respondents were rentvestors, more than half of the respondents would consider rentvetsing as a way of getting into the property market.

More than half of the respondents believe now is a good time to invest, despite the fact the vast majority of respondents (84%) believe property prices will fall or remain flat over the next year.

Clearly, they are taking a long term view.

However, this is significantly down from last year when 61% of respondents thought it was a good time to invest. And significantly, the percentage that is unsure increased to 23% (up from 16% last year).

A total 42% of the respondents plan to buy an investment property in the next year, showing strong confidence in property as a long-term investment.

Not surprisingly, this is down from the last two years, where on both occasions more than half (52%) the respondents were planning to invest in the coming year.

A total 19% of respondents plan to buy a new home in 2019.

This is down from 23% last year, but still higher than the number planning to buy a new home 24 months ago (14%).

While 24% of respondents plan to seek advice from a property strategist or an advisor, 30% will seek no advice on their next property purchase. This is a concern because, despite the significant amount of research material and information available for free, there’s one thing you can’t get over the internet, and that’s a perspective shaped by years of on-the-ground experience.

Some not-so-surprising results

Investors are less confident in short-term capital growth than last year. A total 84% of respondents see property values falling (64%) or remaining flat (20%) in the next year. Last year 64% believed property prices would remain flat, or increase by less than 5% over the following year.

About 40% of the respondents felt it was time to lock in interest rates, suggesting they think the next RBA interest rate movement will be upward. However, the concern of rising rates is less this year, as last year 46% felt it was a good time to lock in rates.

Almost half of the respondents said tighter lending criteria is impacting their ability to purchase another property. Interestingly, this is only slightly higher this year (48%) than last year (46%).

Brisbane was seen as the most likely capital city to deliver strong capital growth over the next 5 years followed by Melbourne. (The numbers in the chart below add up to more than 100% as multiple answers were allowed for this question.)

A detached house in the inner- and middle-ring suburbs of a capital city was seen as the best medium-term investment (31%) while 27% will be looking for a property with the potential to add value. Clearly, off-the-plan properties are out of favour, with less than 1% believing they make good investments.

A total 41% of these investors saw an opportunity to ‘manufacture’ capital growth by purchasing property with renovation or development potential. This is much the same as last year (42%).

The bottom line

It is clear property investor confidence is still strong and those who can afford to are planning to remain as active as ever, buying another investment property or new home if finances allow, despite the fact they do not anticipate capital growth over the next year.

This shows Australian property investors are focusing on long-term capital growth, rather than an immediate equity boost, while many are looking for a property that has potential to add value, rather than waiting for the market to do the heavy lifting.

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