Report reveals lead indicators for property market’s return to form

A long-term study by MCG Quantity Surveyors is helping define investor trends that will flag the property market’s bounce back after COVID-19.

MCG’s 1000 Assets report is a progressive, four-year analysis of investor direction and sentiment between January 2016 and December 2019.

The report also took a pre-COVID snapshot of ‘normal market’ trends in place prior to the crisis.

Managing director at MCG, Mike Mortlock, said that investors were pivoting in interesting ways prior to the outbreak.

“Investors across the nation were tracking a defined path and a return to these trends will indicate were heading back to a more normal state of affairs.

The study analysed information gathered during the preparations of 4000 tax depreciation schedules from January 2016 to December 2019.

“We broke the information into 1000-asset lots by chronological order so we could track investor trends and look at specific moments in time during the period,” Mr Mortlock said.

Some major moves identified and quantified in the report include:

• An increasing in interest for new/off-the-plan investments over existing property,
• A major rise in investors choosing townhouses as an investment,
• An increase in the average number of units per development project,
• A notable increase in investors building bigger, more expensive houses,
• The amount paid for a detached house investment grew by around double that paid for a unit over the past four years.

Data from April 2019 and December 2019:

• Almost half of all investments analysed were renovated after purchase, with an average spend of approximately $37,500
• Around 1 in 4 investors lived in their asset before renting it out. The average length of pre-rental habitation was four years, two-and-a-half months.
• The average size of a detached house investment is almost double that of a unit.
• The average construction cost of a newly-built, detached house investment is $353,473.

The report broke down some results across NSW, Victoria, and Queensland.

“These benchmark measures form a basis for tracking the market’s progression through the crisis and out the other side,” Mr Mortlock said.