90% keen to invest in property: survey

Posted on 6/10/2009  

Nearly 90% of investors plan to buy property in the next two years, according to a new survey. But most will be buying in the wrong place and many will overlook the growing popularity of small apartments.

The PRDnationwide research shows 70% would buy interstate and 66% are seeking long-term capital growth. It is also indicates investors are poorly informed about where to achieve that growth, with few interested in outer city suburbs (where the best long-term growth is achieved).

PRDnationwide national director Jim Midgley says the results are a sign that confidence has returned to residential property investment. “Considering the poor sentiment towards property over the past eight months, these results are promising,” he says. “Investors think we have reached the bottom of the cycle.”  

The survey of 764 investors found most are seeking a property priced between $300,000 and $450,000 which achieves a rental return of between 4% and 5%. Around 36% are interested in property in the middle suburban ring, followed by inner city (34%), coastal areas (15%), outer suburban suburbs (8%), CBD (5%) and rural (2%).

This suggests investors are still being misinformed by property industry rhetoric telling them that the “good” suburbs closer to the CBD are the best investments (contrary to the research data, which shows the cheaper suburbs in the outer ring are consistently the best performers on long-term capital growth). Investors are also overlooking the possibilities of key regional centres which provide good prospects for long-term capital growth. 

About 70% say they would buy property interstate. Those who would not buy property in another state (30%) are not comfortable owning property they could not see or don’t like the idea of buying in a market they are not familiar with. Most respondents were aged over 35 years of age and earned an average annual income of $80,000. 

Two-thirds of investors are seeking long-term capital growth while 22.5% are seeking a good rental yield. Most investors seek properties close to public transport (39%), followed closely by retail and entertainment (21%) and employment (20%). More than half of investors would buy off-the-plan.

“Some investors were wary of developers going broke in the current economic climate and would prefer to purchase once the residences are complete,” he says. “Others were holding out for bargains if developers cannot sell apartments.” Two-bedroom apartments are still most popular, followed closely by two-bedroom-plus-study and three-bedroom apartments.

“This is possibly due to the perception that the rental market is more accepting of two-bedroom units ahead of one or three-bedroom options,” he said. 

Investors are seeking apartments between 81m2 and 101m2 in size and only 4% of investors would buy an apartment under 50m2. This suggests investors are unaware of the growing popularity of smaller apartments, including one-bedroom units, in line with demographic trends.



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