So far this year all the indications point to a rosy outlook for the property investment market, as consumer sentiment continues to grow and investors intend to boost their property portfolios within the coming months. According to the latest MLC Quarterly Australian Wealth Sentiment Survey for Quarter 1, 2014, investors throughout Australia (except Northern Territory and South Australia) were considering buying real estate as part of their long-term property investment strategies in the next quarter[i].
The MLC study, which surveyed 2,051 respondents and was released in April, looked at the likelihood of people investing in different asset classes this year as well as their current financial position. It also measures respondents’ level of concern towards their current investments and their outlook for retirement. While debt reduction was considered an important priority for the majority of those surveyed, many professionals in the high-income bracket and those in larger households were planning to supplement their income with an investment in property this year. Other findings from the MLC survey included:
- More people under the age of 50 were considering property as an investment, with over 10% of people aged 49 and below interested in purchasing real estate in the June quarter.
- Around a third of respondents who earned more than $100,000 already held property as an investment.
- Many people felt that they would like to also invest in other asset classes such as term deposits, cash and superannuation this year, although on balance their interest in shares and diversified funds had diminished since last year.
- The majority of those surveyed were concerned about having enough money for retirement, with many planning turn to investments such as property as way to ensure a flow of income after they retire. Women over the age of 50 were the most worried about the adequacy of their financial plans for retirement, with the majority of men more concerned about missing profitable investment opportunities.
The continuing confidence in property investment strategies among investors seen in the MLC Survey was echoed in the latest findings from the NAB Residential Property Index for the March Quarter: the Index rose one point higher to 37, with the housing market sentiment lifting moderately in South Australia, the Northern Territory and NSW. The NAB Index also found that foreign property investors were particularly active within NSW and Queensland, and demand for new property such as off the plan apartments remained strong in inner city areas in Sydney.
The continuation of record low interest rates, increasing competition between banks and other lenders on mortgages and other investment loans and an improving economic outlook for the country are considered to be the main contributing factors behind the buoyant residential market. As a long-term investment strategy, property, and especially new property including off the plan developments, continues to offer investors a solid foundation on which to build future wealth. If you are considering property as investment it is a good idea to seek professional assistance. You should also contact an investment expert such as Ironfish to help provide you with assistance and support in building your property portfolio.