2010 tipped as The Year of The Investor

By Terry Ryder, 20th January 2010

2010 is being widely tipped as The Year of The Investor, as property investors move back into the market after 18 months of being over-shadowed by first-home buyers.

Many investors, swayed by economists who predicted house prices would fall significantly, stayed out of the market in 2009. A number of surveys indicated investors were waiting for the market to bottom (always a foolish strategy, as the data that marks the bottom of the cycle usually trails the event by six months).

There is already evidence of a resurgence of investor activity. Consider these recent news items (with journalistic hyperbole and inexpert economist comment removed):-

Item 1: After a lacklustre performance by residential rents in 2009, property investors can look forward to a better year in 2010. According to Australian Property Monitors, NSW property investors are poised to significantly improve rental income in 2010. Melbourne rental properties are also forecast to resume a growth trajectory, with rents expected to rise an average 5-6%. APM says the strongest growth in rents will be in Brisbane and Perth. Median house rents in Perth could rise 11% to $400, while Brisbane rents are forecast to grow 8%.

Item 2: Investors have become the driving force of the property market following a decline of first-home buyers. According to ABS data, the value of loans taken for investment purposes rose 2.1% in November and increased 26.1% over 12 months, the best showing in over two years. Improved economic conditions, a stronger labour market, strong population growth and rising rents are forecast to lift investor sentiment in the housing sector.

Item 3: This year is being hailed the "year of the investor" in Adelaide, with selling agents promoting apartments sales with claims of a stock shortage. Real Estate Institute of SA president Michael Brock says many unit projects have been postponed or shelved, creating a situation of limited supply, and predicts prices will rise 10% this year.

Item 4: Property investors in NSW were active in December, spending $180 million on property investment - compared to $153 million over a year earlier, according to the Australian Finance Group. This equates to a 17% increase. AFG says two out of every five mortgages arranged in NSW in December were for property investment.  

ENDS