In a climate of continual newsfeeds and non-stop information, property investors could be forgiven for getting spooked by all of the negative press Australia’s residential real estate sector attracts.
Luckily though, the availability of balanced reporting from industry insiders who understand the rules of real estate and the intricate workings of market cycles is just as prevalent.
And it usually paints a vastly different picture, eliminating the doom and gloom that sells newspapers to reassure investors that housing is a stable and reliable commodity, when approached with the appropriate strategy.
Thankfully, more investors seem to be listening to the latter message and paying less attention to the alarmists, with sentiment surveys revealing a high degree of optimism among property punters as we head into 2015.
Aussies most confident investors
According to a Colliers International 2015 Global Investment Sentiment Report, “Pacific investors (across Australia and NZ), remain the most confident in the world about property investment conditions thanks to sustained levels of strong economic growth and improving global sentiment.”
And our high level of confidence is accelerating, with a whopping 60% of investors expecting favourable market conditions to endure across 2015, compared to just 35% last year.
Data from the study also revealed that 61% of local property investors intend to expand or increase their asset base over the next 12 months, while 34% plan to maintain and consolidate their current portfolios, with only 5% thinking about reducing their real estate holdings.
Interestingly, 75% of respondents to a Smart Property Investment and PIPA Property Investment Sentiment Survey from October last year, said if the current low interest rate environment continues across 2015 they would consider buying more investment properties.
The same research findings showed that 79.6% believe now is a good time to invest in property, with 30.1% citing favourably low interest rates and 21.8% stating stability compared to other asset classes, as the reason they felt property represents an attractive investment right now.
It’s reassuring to see that the message about how and why to invest in bricks and mortar as a commodity is apparently filtering through.
Just over 60% of investors who participated in the SPI/PIPA survey stated they select property assets based on a long-term strategy and 64.9% are buying based on capital growth prospects. While 51.5% said their overall appetite for risk as an investor was medium/high.
Feeling good about our fiscal future
One of the reasons Australia’s property markets are maintaining their current, relatively high level of esteem with investors is obviously interest rates. So what do punters anticipate from the Reserve Bank in 2015?
Data from research house Investment Trends suggests that the number of investors who expect the RBA to slash rates when they reconvene in February has increased more than sevenfold, from just 4% in August to 30% in December.
Contrary to the apparent tide of investor enthusiasm outlined in the aforementioned two reports however, Investment Trends research analyst Recep Peker said, “The December edition of our monthly Investor Intentions Index found a sharp deterioration in investors’ outlook for the Australian economy.”
He said the proportion of active investors who planned to increase their exposure to property investment in the next month was just 3% – the lowest it’s been since October 2011.
Senior rates strategist at ANZ Bank Martin Whetton, said falling global oil prices and poor employment data had people banking on further rate cuts over the first half of 2015.
All of this research comes on the back of languishing returns on cash and term deposit accounts, as well as an unimpressive 7.5% investor yield on Australian super funds for 2014 – a far cry from the bumper 16.3% netted in 2013.
Many market analysts believe these less than enticing returns will force more investors to seek out alternative vehicles to fund their retirement, including local and international real estate.
Overall, it appears as though we are in for another interesting year in Australia’s housing sector. Numerous global fundamentals operating on an increasingly worldwide economic stage will continue to shape local consumer sentiment and habits into the future.
The question is, what and who will you be listening to across 2015? And what will be the basis of your next investment move?