Investors in Australian residential remain bullish, survey shows

Australian property investors remain bullish about the long-term merits of residential real estate, according to a survey.

Despite concern over property price bubbles, tightening investor-lending policies and the debate over the future of negative gearing, belief in the sector remains, according to the second annual Property Investment Professionals of Australia (PIPA) Property Investor Sentiment Survey.

The survey of more than 1,000 investors shows that more than 70% of respondents think now is a good time to invest in the asset class, up by 5 percentage points compared with last year.

According to the survey, 72% of investors are unconcerned by the potential removal of negative gearing, and only 2% think available negative gearing concessions are the key attraction of real estate investment. 

PIPA chair Ben Kingsley said the survey results confirmed property investors remained focused on the long-term benefits of the asset class.

“Similar to last year, most property investors are looking past short-term challenges, remaining focused on the long-term wealth benefits that are available from residential real estate, including the potential for capital growth and rental income. Importantly, most investors are not speculating on quick gains in a low-interest-rate environment.”

He added: “The survey also affirms that a lot of the discussion about negative gearing misses the mark. Most investors understand that negative gearing is only a short-term cash flow position, not a property investment strategy. And only a very small minority are attracted to real estate for these tax concessions.”

The number of investors who believe Brisbane offers the best investment prospects has fallen slightly – from 58% to 50% over the last year.

The city, however, still comes ahead of any of Australia’s other major cities (Melbourne 20%, Sydney 11%, Adelaide 9% and Perth 4%).

“Property investors are becoming more savvy,” Kingsley said.

“Many of them continue to look outside of our biggest property markets – Sydney and Melbourne – which are coming close to the peak of their cycles.”

Brisbane still attracts investors for its affordability and potential for attractive yields, he said.

“Brisbane is investing in infrastructure to make the city more liveable, and investors are clued on to this,” he said.

Invesco recently provided AUD150m (€101m) in senior debt to a high-rise residential project in Brisbane. The financing of Skytower, currently under development, is being made on behalf of one of Invesco’s regional opportunity funds, according to industry sources.

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