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But investors actually play a vital role during softer market
conditions. Investors assist in growing the supply of new
dwellings and provide rental accommodation for those who
cannot afford to purchase, or are saving to buy a property.
The strength of recent investor demand for off-the-plan
dwellings has also provided a boost to the national economy
with the current construction boom creating new jobs and
supporting local communities.
So what attracts investors to property in Australia?
Over the past two years there have been a number of key
drivers attracting higher than normal levels of investors in the
residential property market in Australia. These include:
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Record low interest rates.
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Volatility in other investment assets classes e.g. equity
markets.
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Low returns on other assets classes e.g. government
bonds and term deposits.
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The perceived security of bricks and mortar.
The 2015 LJ Hooker Investor/Tenant survey
LJ Hooker recently undertook a major survey of landlords
around the country to gain further insight in the drivers of
residential property investors around the country.
Boosting wealth and setting up retirement
The results also showed how an investor’s property portfolio
transforms in line with their journey through life. Investors aged
between 18 and 24 own two properties on average while those
close to retirement (55 to 64) own more than three properties.
Then at the age of 65 investors sell down a proportion of their
portfolio, to help fund their retirement, with the 65+ age group
owning an average of just under two properties.
Income doesn’t limit investment
Property investment is not just limited to the wealthy. The survey
showed that 37% of landlords have an annual household
income of under $100,000 per year. A further 29% earn
between $100,000 and $150,000 and 34% have an income of
more than $150,000 per year.
A balanced investment strategy dominates
One of the key drivers pushing investors to invest during
the current cycle has been the strong capital growth seen
particularly in Sydney and Melbourne. Our survey results show
that while a majority of investors take a “balanced” investment
strategy (58%), a large proportion do view “capital growth” as a
vital part of their investment strategy (27%), compared to those
just focusing on “yield” (15%).
Investors search far and wide for the right property
The mobility of the investors is also highlighted in our survey with
just 16% owning an investment property within 5 kilometres
of where they live. The majority of investors (28%) have an
investment property “more than 20 kilometres but in the same
state” of where they live while 14% invest in a different state to
the one where they live.
Negative gearing plays an important role
As expected negative gearing plays an important role in a
typical property investment strategy with 55% stating that it
was “important” or “very important” to them. In addition to this,
31% said that they would sell some, or all, of their investment
properties if negative gearing was abolished.
Conclusion
The broad and diverse demographic mix, of property
investors provides a key insight into why so much public and
media attention is afforded to the residential property market.
In addition our survey shows that property investment
transcends age and plays a vital role in creating wealth through
all stages of life.
An insight into the mind of a property investor
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
UNDER 18 18 to 28 25 to 34 35 to 44
Investor Age
Average number of investment properties
45 to 54 55 to 64 65+
Investment properties by age group
Investors have long played a vital role in the development and evolution of
the Australian property market. Some public debates created a negative
perception around the recent increase in investor activity, claiming it priced out
first home buyers in a competitive market, while negative gearing was an impost
on the tax base.
Source: LJ Hooker Investor Survey 2015
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