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Australians feeling positive about buying investment properties in a recession

Nov 10, 2020 |ALISON CHEUNG

Low mortgage rates and falling home prices are encouraging Australians to invest in property, despite COVID-19 and the recession, according to new study.

While Australians have been changing how they manage money since the pandemic hit, research commissioned by ING suggested that Australians haven’t lost hope in gaining wealth through real estate.

More than a quarter reckon it is now “the best time” to dip their toes in the property market, according to the survey of more than 2,000 adults, which ran in August and September.

Specifically on real estate investment, nearly 45% consider housing as the strongest investment option.

Millenials had the highest animal spirits, with half of them feeling confident about buying an investment property.

About 44% of those surveyed overall showed optimism towards housing investment.

Many have even begun to take action on their property investment plans. One quarter of millennials and 23% of those in Generation Z indicated they have been building up funds to begin their investment journey.

An increasing number of first-time investors are testing the real estate waters.

According to a separate poll by the Property Investment Professionals of Australia (PIPA), 29% of investors who had purchased in the past year were buying for the first time. This is a hike from 21% in 2019.

Why Australians have their eyes on property investment

The biggest factor driving Australians to set their sights on property investment was low interest rates, with a third of survey participants saying this was their key motivator.

The Reserve Bank of Australia this year lowered the cash rate three times, twice in March, at the onset of COVID-19, and once in November. This has brought the cash rate to a historic low of 0.10%, seeing many mortgage rates on the market in the 2% bracket and, in some cases, even lower.

The second most prominent factor contributing to strong property investment intentions was the belief that housing prices would come down. Nearly 30 per cent indicated this belief pushed them to consider parking their money in the real estate market.

COVID-19 driving Aussies to think about their finances

Julie-Anne Bosich, ING’s Head of Home Loans, said the pandemic had indirectly boosted property investing intentions among Australians.

“The research suggests COVID-19 has left many Aussies cautiously thinking about how they can invest to take greater control of their financial future,” she said.

“While, understandably, not everyone is in a position to use their finances to invest, our research has found that for those who are, the preferred investment choice is property, especially in the current climate where interest rates are at a record low.”

A strong recovery after COVID-19?

Despite being heavily hit by COVID-19, prospective investors see Melbourne and Sydney as the top areas to invest in – an indicator of the confidence in capital city markets to rebound post-pandemic.

However, not everyone is buying the falling property price story.

CBA’s Head of Australian Economics Gareth Aird believes low interest rates could even help drive up real estate values, as the housing market has so far responded well to the low interest rate environment.

“Dwelling prices could accelerate quite quickly as the economic recovery continues to gain traction,” he said.


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Alison has written about property since 2015. Her work has been published by NewsCorp, Domain and Business Insider. Alison is motivated to help Australians make better property investment decisions.

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