Investing in property should alleviate financial anxiety rather than create it. However, fear is holding many investors back, according to a property research and investment firm.
Aviate Group managing director, Neil Smoli, says it is not surprising that the cost of living was rated by consumers as the single biggest cause of anxiety in the recent NAB Consumer Anxiety Index.
However, Mr Smoli is surprised that this anxiety prevents, rather than encourages, action to be taken.
“When it comes to the mindset of an investor, the concept of fear is often front and centre. Many potential investors are prevented from acting because of fear. For others, fear is actually the motivation for making the decision to invest,” Mr Smoli said.
“The point is, with so many Australians understandably concerned with the cost of living and their ability to fund their retirement, taking no action will only see those concerns remain unaddressed.
“Of course, people want to feel secure in their chosen investment, to feel they have mitigated as much risk as possible,” he said.
The NAB Consumer Anxiety Index also showed that despite uncertainty surrounding the future of the employment market and tempered economic growth, job security concerns actually ranked lowest among respondents.
This should resonate as positive news for investors, Mr Smoli said.
“The rental market obviously has close ties to the employment market and investors will welcome the level of confidence among employees in the current economic climate. A stable employment market underpins rental performance and supports demand over the long term,” he said.
Property Investment Professionals of Australia's (PIPA) chair Ben Kingsley agreed that currently the environment is a positive one for those looking to invest, but said that we are actually seeing a "new wave" of investment activity.
“We saw four cash rate cuts of 125 basis points throughout 2012, bringing the official cash rate in 2013 to a historical low of three per cent and, as a result, we’re seeing an abundance of very attractive home loan rates.
“Combine this with very strong rental yields and low vacancy rates across many property markets, and the impetus to invest in property is stronger than it’s been for quite some time.”
New figures released from the Australian Bureau of Statistics (ABS) this month confirm that investment activity is beginning to gain momentum, with the value of investment housing commitments (trend) rising 1.5 per cent in February 2013, or $115 million, Mr Kingsley said.
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