“Has the coronavirus induced recession affected you?”
“Are you considering moving to live in a different location because of Covid-19?”
“Has the pandemic changed your strategy or approach to property investing?”
These are some of the Covid-19 related questions we recently asked 1,500 Australian property investors and would-be investors in our annual Property Investment Sentiment Survey, and some of the answers were enlightening.
Running since 2011, our survey offers rich and vibrant insights into how property consumer trends and sentiments have changed over time.
A surprising result this year was that more respondents (74 per cent) believe this a great time to invest.
Half are planning to buy an investment property and nearly a quarter (24 per cent) are hoping to buy a new home in 2021.
Is now a good time to invest in residential property?
Respondents to the survey saw this as the best time to invest in property for a long time, with 74 per cent believing now is a good time to invest.
This figure is up significantly from 68 per cent in 2019, 52 per cent in 2018 and 59 per cent in 2017.
Half of respondents said they were planning to buy an investment property in the next year (up from 42 per cent last year.)
But investors remain cautious
Nearly half (45 per cent) of respondents see property values rising in the next year.
Last year, three in five respondents thought property values would rise in 2020, while the year before 84 per cent of respondents expected property values to fall over the coming year. Interestingly they were wrong each time.
Has the pandemic changed your strategy or approach to property investing?
While a quarter of the respondents were a little more cautious due to the current economic climate, the vast majority of investors (65 per cent) are not changing their approach to property investment.
Has the pandemic impacted your immediate investment plans in the next 12 months?
While one in five are pausing the investment plans until the situation became clearer, the majority of respondents are not going to change their plans and 14 per cent are going to take advantage of the current climate to enter the market sooner.
In fact, half of the respondents were planning to buy an investment property in the next 12 months – this was the highest percentage in this annual survey over the last five years.
What type of property are you planning to buy?
Clearly, off-the-plan properties are out of favour, with respondents keen to buy established properties, and in particular those with the ability to add value through renovation or development.
Only 10 per cent of respondents said they had applied for a mortgage repayment holiday for either their home or investment properties because of Covid-19.
However, one quarter of the respondents had received a request for a rental reduction or holiday because of Covid-19 from the tenants.
Are you considering moving to live in a different location because of COVID-19?
When asked whether they were considering moving to live in a different location because of COVID-19, 90 per cent have no plans to move end of the others, only 2 per cent considered moving to regional Australia, with Queensland being the most popular destination to make a new home.
Those looking to move elsewhere were looking for a better lifestyle.
The Bottom Line
The fact that respondents to this survey were already a captive audience of people already interested in property.
When asked for their combined family income 2 per cent earned less than $50,000 while 35 per cent earned more than $200,000 but the bulk earned a combined family income between $100,000 and $200,000.
Most (88 per cent) owned at least one investment property, but a wide spectrum of investors partook in the survey:
- 12 per cent owned no investments;
- 20 per cent owned one investment property;
- 19 per cent owned two investment properties;
- 13 per cent owned three investment properties, and it went all the way up to
- 5 per cent owned 10 or more properties.
And clearly, these investors took a long-term view and 74 per cent felt that now is a good time to get involved in the property market, with half planning to buy an investment property in the next year (up from 42 per cent last year) and 24 per cent planning to buy a new home in 2021.
In previous surveys, this figure has been 20 per cent for the last 3 years.
Our survey shows that Australian property investors focus on long-term capital growth, rather than cash flow and many are looking for a property that has the potential to add value, rather than waiting for the market to do the heavy lifting.
Investors will still face a number of hurdles with the economic challenges facing Australia, yet few have changed their long-term plans due to Covid-19.