Australia’s property investors have high hopes for the future, but admit that more education is needed around the risks and benefits of investing in this asset class.
The 2017 Property Investment Professionals of Australia (PIPA) investor confidence survey reveals that 84 per cent of respondents think property investors should have more education around “the risks and potential benefits” of property investment, despite 33 per cent of investors having a set strategy for investment in place.
Further, 90 per cent argue that all advisers in this space should be qualified, regulated and licensed.
“Unlike financial planning and mortgage broking, the provision of property investment advice still remains unregulated,” PIPA chair, Ben Kingsley commented.
He added: “PIPA is committed to raising the professional standards of this industry and will continue to lobby the government to regulate property investment advice and educate investors to help them make informed investment decisions.”
The report also revealed that investors are increasingly turning to mortgage brokers to help them access financing, with 83 per cent hoping to finance their next loan via the broker channel. That’s up from 71 per cent last year.
This broker reliance could be tied to the crackdown on investor lending by the Australian Prudential Regulation Authority in March.
Because of the corresponding change in lending policies, 43 per cent of investors have experienced difficulty accessing financing for an investment property, as opposed to 32 per cent last year.
Nevertheless, 70 per cent of investors consider now to be a “good time to invest in residential property” and 61 per cent are thinking about purchasing in the next six to 12 months.
Additionally, just 14 per cent have put plans on hold due to fears that negative gearing could be banned and only 15 per cent have postponed investment plans due to concerns over a price bubble.
“It has been an eventful time for residential property investors since we published our last survey in 2016,” said Mr Kingsley.
“Similar to last year, most property investors are looking past short-term challenges and are remaining focused on the long-term wealth benefits that are available from residential real estate.”
Noting that the survey reveals that “a lot of the speculation about negative gearing misses the mark”, Mr Kingsley concluded: “Most investors understand that negative gearing is only a short-term cash flow position, not a property investment strategy. And only a very small minority are attracted to real estate for these tax concessions.”
Lucy Dean, Nestegg.com.au (online), 30 September 2017