Investors drive regional and coastal surge

Two-thirds of investors were confident that property market conditions would strengthen nearly six months ago, proving that the present price growth should not be a surprise, according to the Property Investment Professionals of Australia (PIPA).

The 2020 PIPA Annual Investor Sentiment Survey found that 67 per cent of investors thought it was a good time to invest in residential property, with nearly 50 per cent intending to buy a property during the next year.

Notably, survey respondents also showed a sharp uptick in interest in regional areas as well as coastal locations.

Indeed, the proportion of investors that said regional markets were the most appealing increased to 22 per cent in 2020 from 15 per cent in 2019, with coastal locations also on the rise – up to nearly 12 per cent from eight per cent the year before.

PIPA chair Peter Koulizos said investment activity had been growing over recent months, which is a situation set to ramp up this year.

“The low point for investment activity was May last year, however, new loan commitments have grown since that time to be about 10 per cent higher in December than the same period the year before.

“In fact, the latest official data shows that more than $6 billion worth of new investor loans were recorded in December – the highest level since July 2018.”

With strong activity from owner-occupiers and first home buyers already under way, the increasing numbers of investors in the market would add to property price pressure in many locations around the nation, Mr Koulizos said.

“Part of the reason for dwelling price rises is the low supply of properties that are hitting the market, which was also foreshadowed in last year’s survey when 71 per cent of investors indicated that the pandemic had made them less likely to sell a property over the short-term,” he said.

The survey also foretold the current robust market conditions in smaller capital cities, as well as major regional areas, with investors indicating they were most bullish about Brisbane rather than Melbourne or Sydney.

Mr Koulizos said with owner-occupiers, investors, and first home buyers out in force at the same time, there is only one way for property prices to go – up.

“If you add low supply levels as well as once in a generation interest rates into the mix, then property markets are set for strong conditions for the foreseeable future, in my opinion,” he said.