Property investors opt for old over new

June 23, 2016

Property investors are increasingly on the hunt for established dwellings, new research has revealed.

According to Mortgage Choice's annual Investor Survey, 76.7% of Australian investors purchased an established investment property rather than a new build.

“This is up from 2015, when 75.8% of investors indicated that they had purchased an established dwelling,” Mortgage Choice chief executive officer John Flavell said.

“Despite the fact that there is an increasing number of new properties – including new apartment blocks – coming onto the property market, it would seem as though the majority of investors feel as though an established dwelling would best suit their needs.

“Investors are savvy, they aren't looking to lose money on their investment. They want to invest in a property that has the potential to deliver strong capital growth and rental yields. And looking at the data, it would appear the majority of investors believe an established dwelling will help them to do just that.

“Further, our data suggests the majority of investors also want to buy a decent sized property that will attract a wide range of tenants.”

More than 71% of investors said their investment property was a house that boasted at least two bedrooms.

“Investors understand that the better their premise is in terms of size and access to important amenities, the more likely they will be to attract and retain good quality tenants,” Mr Flavell said.

“The reality is, the vast majority of the dwellings that are attractive to potential and existing property investors are good sized, established properties.

“With that said, I hope both sides of government make sure they complete a thorough analysis of the impact that restricting investment policies like negative gearing to solely new properties would have on both potential and existing property investors.

Earlier this year, the Labor party announced it would restrict negative gearing to just new properties if elected.

“At Mortgage Choice, we believe negative gearing plays an important role in the property market. The tax benefits associated with negative gearing helps to make property investment more attractive to some Australians. And, given that the success and strength of the housing market is critical to the ongoing health of the Australian economy, it doesn't make sense to consider removing any initiatives that help this market,” Mr Flavell said.

“Instead of placing the emphasis on negative gearing and the impact it has on the property market, we should be placing the emphasis on first home buyers and what initiatives/incentives we can introduce to help them.  

“Looking at our latest data, more than one third of property investors were first time buyers. In other words, one in three property investors decided to buy an investment property before an owner occupied home.

“Looking ahead, with property prices rising fairly steadily across the capital cities, I wouldn't be surprised to see an increasing number of first time buyers purchasing investment properties before an owner occupied dwelling.”