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With the first home buyer government stimulus package now wound back, the investor sector is expected to generate solid broker business over the period ahead; but what do our industry pundits think? This month we asked...
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WILL INVESTOR ACTIVITY CONTINUE TO BOOM BEYOND THE END OF 2010?
GRANT LLOYD
National Mortgage Company
“Investor activity will continue to perform strongly beyond the end of 2010, especially in our capital cities. With housing shortages, in particular rental stock with no short to medium term fix in sight, the simple supply and demand principle remains. Demand outstripping supply will continue to allow investors to receive sound returns. As property prices surge higher, impacting affordability, investors will be in the enviable position of just about writing their own ticket in terms of rent. Provided the fundamental rule of choosing a property in the right location is adhered to, investors will reap the rewards.”
GERARD HANSEN
Auspak Financial Services
“There’ll definitely be an increase in the investor market beyond 2010. You can see the emergence of investors now, particularly in the northern beaches [of Sydney], which is where we do the majority of our business. There’s a huge demand for rental properties and this has pushed rents higher. For a three bedroom house in Manly you’re looking at about $2,000 a week in rent. The lack of building activity since 2003/2004 means recent property developments have been selling like hotcakes. Investors can achieve a great rental return and properties are close to being positively geared [in some cases]. Further, new developments mean depreciation benefits for investors. It’s something that Sydney hasn’t seen for a long time.”
ANITA MARSHALL
Advanced Finance Solutions
“Absolutely. The residential investment property market is going to be popular for quite some time. As we deal specifically in investment property finance, we have seen a strong upswing in this market sector over the past six months. Investors have confidence in property that is unmatched when it comes to other investments, such as shares. Property is bricks and mortar – it’s tangible – and for many people, investing in property is easier to understand than investing in shares. On top of that, property investments have a proven growth record.”
STEVE KANE
FAST
“There has been a steady increase in investor numbers and this will continue beyond 2010. The increase of investors in the market has been driven by vacancy shortages leading to high rental yields. Rising interest rates haven’t really muddied the water for investors as interest rates are still at historical lows. Even if interest rates rise another 25 to 50 basis points, it’s still a relatively good market for investors, compared with years past. Provided that tax treatment in Australia doesn’t change significantly I think we can expect to see considerable investor appetite in the property market for many years to come.”
WENDY HIGGINS
Mortgage Choice
“Investor activity will continue to boom beyond the end of 2010 as a lot more people are becoming better educated about investing in property. They will either enter the market for the first time or will add more investment properties to their existing portfolio. There is so much information available to the general public about investing in property – such as magazines, investment seminars and TV shows – and history has shown it to be a good way of creating wealth over time. With property prices continuing to increase alongside interest rates, fewer first home buyers will be able to enter the market, hence more will have to continue to rent, which will push rental yields up, making the property market even more attractive to investors.”
