What Drives an Investor to Buy - Exclusive Survey Results
The 2015 LJ Hooker Investor / Tenant Survey Results
Real Estate and a Person's Wealth Journey
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.
However, investors actually play a vital role during softer market conditions. Investors help grow the supply of new dwellings and provide rental accommodation for those that 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 has been a number of key drivers attracting higher than normal levels of investment in residential property in Australia.
- Record low interest rates.
- Volatility in other investment asset classes e.g. Equity markets.
- Low returns in other assets classes e.g. Government bonds and
- term deposits.
- 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 into the drivers of residential property investors around the country.
Boosting wealth and setting up retirement
The results 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. Once investors turn 65, they have a tendency to 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.
Average number of investment properties by age group
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.
Average number of investment properties by income
A Balanced Investment Strategy Dominates
One of the key drivers pushing investors to invest during the current cycle has been 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%).
Property investment strategy
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.
Distance of investment from residence
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.
How important is negative gearing?
The broad and diverse demographic mix, which make up 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.
If you are looking to sell, buy or rent to achieve your real estate dreams, we can connect you with your local LJ Hooker office.
Please call 1800 621 212 or visit www.ljhooker.com.au today for more information.