As the deputy chair of the Property Investment Professionals of Australia (PIPA), I’ve eagerly awaited the results of our 2022 Investor Sentiment Survey.
We’ve been running this study for eight years now and it provides a fascinating insight into the Aussie investor psyche. People share a wide range of information with us from demographic details to portfolio makeup. Perhaps most important of all, they reveal how they feel about the market landscape and their plans as they proceed along the property investment journey.
This year the survey garnered the most respondent ever with 1618 people taking part. It was a massive result with valuable insights for all property stakeholders – politicians, advisors, landlords, tenants and society at large.
While I strongly urge you to head to the PIPA website and have a look at the full document, I do have a few key insights to share.
Investors are responsive
I’m often concerned about investors making knee-jerk decisions in response to bad news. However, a prolonged campaign of anti-investor legislation and commentary has compelled an increasing number of landlords to sell down their assets. Throw in improved property values and you can see why these sales have occurred.
According to our survey, 16.7% of investors have sold at least one property over the two years to August 2022. This would equal a potential drop in the rental supply of 10%, or approximately 269,000 dwellings, given around 65% of these properties were bought by owner-occupiers.
Is it any wonder we’re in a rental crisis?
The survey showed the number one reason investors sold their assets was because of positive selling conditions at the time. The second and third most common reasons were to reduce their total borrowings and changing tenancy legislation making it too costly or hard to manage.
And Queensland has borne the brunt of bad political decision-making over recent times.
The survey found an unbelievable 45.1% of investors had sold at least one property in Queensland in the two years to August 2022. This has translated into more than 160,000 rentals potentially sold to homeowners – around 30% of the total rental stock.
While you might applaud the idea that people are buying their own homes, it’s worth noting that these homebuyers aren’t all coming from the existing rental pool. In fact, demand for rentals has only increased.
The silver lining is that these results were the atomic bomb that helped blow up the proposed QLD Land Tax amendments recently. You can read about that here in one of my recent blogs.
And there could be more pain to come for tenants, unfortunately. The study found approximately 19% of investors are considering selling an asset in the next 12 months, which could potentially deplete the supply of rental properties around Australia by another 200,000.
Time to buy
The survey also asked respondents for their market outlooks.
Unfortunately, their confidence in the future has taken a hit too. Around 58% of investors believe now is a good time to invest in residential property, but that’s down from 62% in 2021, and down significantly from the 67% recorded in 2020.
When asked where property prices were heading in the next 12 months in their home state or territory, 40% said prices would stay the same, but 35% said they would be worse. A hopeful 25% indicated that prices would increase.
In 2021, a staggering 76% (up from 41% in 2020) of respondents said prices were going to get better – and they were generally right.
The survey also revealed that despite the political upheavals, Queensland remained the top investment destination nationally with 33% of respondents saying it was their preferred buy-in location. Mind you, its appeal has waned significantly compared to the 58% result from last year’s survey.
Western Australia has gained favour as an investment location coming in second place with 17.8% of investors saying it’s their pick. That’s a huge rise up the rankings compared to last year’s result of 9%.
In bad news for the south, Victoria landed in the fifth position – its lowest ranking ever – with only 12% of the vote.
Those keen to buy are showing they’re recovering from the pandemic as well. Close to 56% of investors believe metropolitan markets offer the best investment prospects, which is up from 50% last year. Coastal locations fell to 15% this year compared to last year’s 22% result.
I think the survey shows that most investors will hold assets for the long term and be fairly immune to short-term challenges. That said, they remain an engaged and active cohort who are reading and reacting to current events. If politicians and special interest groups continue to ignore investor concerns and sentiments – and continue to downplay the valuable contribution they make to sheltering Australians – there will be more housing troubles ahead for this country.
Always review any property location research and investment analysis data, with a professional, QPIA (PIPA Member) qualified & accredited ASPIRE Property Advisor Network Advisor. Never rely on glossy sales brochures or property marketing information, ensuring a property is right for your strategy. Property Investing is about BUYING a property that matches your goals and aligns with your investment strategy. Never be SOLD an investment, know your numbers!
Visit www.aspirenetwork.com.au or call our office to be connected with an accredited and independent Property Investment Advisor on 1300 710 933
