Investor numbers exploding

By Steven Cross

Property investment has become the most popular reason to purchase property in the second half of 2012, according to figures released by a major real estate group.

Harcourts' November 2012 external client survey for Australia and New Zealand showed that the number of buyers purchasing a property for investment purposes rose significantly in the second half of 2012, from 16 per cent in July 2012 to 47 per cent in October.

Bryan Thomson, head of real estate operations for Harcourts Australasia, said the market is perfect for investors.

“New home building has been very subdued over the past three years which will inevitably create a shortage of available property as the Australian population continues to grow,” he told Smart Property Investment's sister publication, Real Estate Business.

“That shortage will mean a steady increase in demand which will in turn lead to an increase in rents paid. Because of this increase in demand, vacancy rates will remain low, meaning investments are more secure.

“With interest rates at historically low levels, and forecast to drop further, the cost to borrow money is low and with rising rents, means the financial return on investment property is increasing,” he said.

The survey of 1,400 buyers, vendors and renters who deal with Harcourts is conducted each month.

Mark Hewitt , general manager of sales and operations at mortgage broker aggregator AFG, which handles around 10 per cent of residential mortgage transactions nationally, said that New South Wales was leading the way for investor interest.

“We're not seeing a surge of confidence sweep across the country, but different categories of borrowers in different states are feeling more comfortable about taking on loans," he said.

“New South Wales is by far the most popular state for investors, while WA is leading the way for first home buyers.”

According to AFG November figures, loans for investors in NSW made up 43.1 per cent of all new loans, compared with 35.1 per cent in Queensland, and 33.6 per cent in Victoria.

And the trend appears to be continuing, with other major groups expecting big growth in the investor market.

Brian White, chairman of the Ray White Group, told Real Estate Business earlier this month that he is expecting more activity in investor markets, partly on the basis of more Australians creating self-managed superannuation funds (SMSFs).

“The investor component … we expect it to go up to 35 or 36 per cent of our turnover," he said. "That’s up from around 28 to 30 per cent not so long ago. So the component of investor product will increase.”

Raine & Horne has also identified the trend, and is expecting growth to continue into the New Year.

“With interest rates sitting near record lows and rental yields consistently rising in our capital cities, conditions are ripe for a fully-fledged investor assault on Australia’s property markets in the New Year,” Angus Raine, CEO of Raine & Horne, said.

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