Property market not overheating: investors

By Staff Reporter

Despite months of commentary and speculation about property bubbles and overheated market activity, investors still believe now is the right time to buy.

A national survey of property investors has revealed that investor demand for property shows little sign of slowing any time soon.

The latest Smart Property Investment/ PIPA Property Investor Sentiment Survey indicates that despite talk of property bubbles and concerns that property price growth is unsustainable, confidence in the Australian property market remains high.

According to the survey, 80 per cent of investors believe now is a good time to invest in property, and 68 per cent are looking to purchase within the next six to 12 months.

These figures were marginally lower than the inaugural survey, conducted in February 2014, which revealed 84 per cent of respondents thought it was a good time to buy and 71 per cent planned to buy in the next six to 12 months.

Low interest rates continue to play a big part in investors’ decisions, with 30 per cent of investors citing this as a reason to buy in the current market. Capital growth opportunities and property’s stability compared to other asset classes were also top factors underlying property’s investment appeal, with 25 per cent and 22 per cent of respondents citing these reasons respectively.

PIPA chair Ben Kingsley said the survey results confirmed investors were unwavered by any concerns about the property market overheating.

“The property market is gaining a considerable amount of media attention at the moment and there has been some concern that some markets are overheated,” he said.

“Certainly there has been strong price growth in some markets, but this is not the case right across the board and these survey results reinforce the fact that property remains a firm investment favourite. Investors recognise the long term capital growth prospects property brings and they are taking advantage of a low interest rate environment to build their property portfolios.”

Smart Property Investment magazine editor Phillip Tarrant said the record-low interest rate environment looked likely to encourage more homebuyers and investors into the property market in coming months.

“A clear relationship can be seen between low interest rates and property investment activity,” he said.

“More than half of respondents felt their recent purchase decisions were accelerated by the low interest rate environment. With interest rates unlikely to rise anytime soon, we may see strong property market activity continue for some time yet.”

The Smart Property Investment/PIPA Property Investor Sentiment Survey surveyed 627 respondents over August and September 2014.

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