Will 2019 be the year of investors? Despite factors such as falling real estate prices, many seem to believe this, according to the results of the 2018 Survey of Real Estate Investor sentiment jointly conducted by Michael Yardney's Property Update, Your Investment Property and On The House.
The results of the survey show that more than half of the 1,802 respondents believe that 2019 is a good time to invest in real estate. 42% of them are actively planning to buy new properties as part of long term investments. An overwhelming number of respondents (84%) expect market values ​​to remain stagnant or decrease in 2019, but they still see potential.
However, compared to 2017, confidence in the real estate market has declined, with negative feelings rising over the course of the year. This suggests that the decline in the performance of the domestic real estate market has had a detrimental effect on buyers.
Nevertheless, Michael Yardney, CEO of Property Metropole Property Strategists and founder of Property Update, believes that buyers are always ready to invest.
"It is clear that the confidence of real estate investors is still strong and that those who can afford it are planning to stay as active as ever, buying another investment property or a new home if finances allow it", says -he.
"The confidence of real estate investors is still strong and those who can afford to do so are still as active as ever"
The survey results provide an interesting snapshot of Australian daily investors' expectations and predictions of the real estate market in 2019. The majority of respondents worked with budgets based on a family income of between 100,000 and 200,000. $ 000 and brought a varied investment experience. at the table. For example, while most owned an investment property, others owned 10 or more, which created a diverse pool of investors.
Now or later?
More than 50% of survey respondents said they were investing in order to take advantage of future capital growth on their properties and nearly 20% sought to add value and keep their investments.
"This shows that Australian real estate investors are focusing on long-term capital growth rather than an immediate increase in equity, while many are looking for a property that is likely to create value, rather than d & # 39; wait for the market to do the right thing, "said Yardney.
This long-term desire to persist probably stems from investors' doubts that we will see capital growth in the short term. Restrictive lending criteria that have slowed markets, particularly in Melbourne and Sydney, have contributed to this situation. In fact, 48% of respondents indicated that loan restrictions had affected their ability to increase their portfolios and 30% felt that they were the main obstacle to buying a property.
Nevertheless, the short term investment has its supporters – the percentage of cash flow investors has gone from 11% to 14.2% over the period 2017-2018.
Many investors also find the value of a balanced portfolio consisting of capital growth properties and cash flow. Only 38.6% of respondents had a portfolio with negative management, while 31.8% had a portfolio generating positive cash flow. Still others had structurally neutral portfolios, which may be the result of negative structure properties generating cash flow over time as rents increase.
However, since the last period of investigation, the volatility of the domestic market has resulted in a decline in overall consumer confidence. Although 52.6% of investors still think that 2019 is a good time to enter the real estate market, it is a 61% drop in 2017. More and more people are not sure where the market is heading, with 22.8% expressing uncertainty compared to 16% in 2017.
This had a visible impact on some investors' plans for 2019. While more than half of survey respondents in 2016 and 2017 indicated their intention to buy more properties in subsequent years, only 42.1% of 2018 respondents indicated their intention to 2019. Homebuyers are also moving out of the market, and 65.5% of them have chosen not to buy a home in 2019 .
Where to look?
With the recent slowdowns in Melbourne and Sydney, Brisbane has become the capital that nearly half of those surveyed have the highest growth potential over the next five years. As a result, over 30% of respondents bought properties in this city, known for its affordability compared to its more popular peers.
Surprisingly, despite the rocky performance of Perth in recent years, 13.8% of respondents believe that it could already be on the road to recovery between 2019 and 2024. On the other hand, even though Hobart has performed spectacularly In recent years, only 6.5% of respondents expect this city to maintain its long-term growth. This echoes the opinion of some industry experts who believe that Hobart is a small economy with a low cap.
Houses or units?
Apartment living is becoming more popular, but not among respondents to the survey.
Only 6% of them would actively seek to buy an apartment and only 10.6% would choose a townhouse or a villa. Most people still seem to prefer homes (39.3% of respondents).
The boom in renovation and development is an interesting emerging trend – 34% of those surveyed would choose a property to which they could add value in this way. In fact, 40% would prefer to choose an established property on which they could work rather than a new property (8.2%) and 27.5% think that properties offering value-added potential could constitute the most important investments. ideal for the next few years.
"Investors saw an opportunity to" fabricate "capital growth by buying properties with potential for renovation or development," says Yardney.
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