“Clearly, additional interest rate cuts will drive more investor money into bricks and mortar, but an easing in monetary policy also denotes an economy that is not creating enough jobs or growth,” said Angus Raine, CEO, Raine & Horne.
“Also memories of the GFC are still short, so we don’t expect an investor stampede in 2012, rather it will be more like a slow increase as savvy investors look for quality, well-located properties with long-term growth and income prospects,” adds Mr Raine.
Investors would likely target middle ring suburbs in Sydney, Brisbane and Perth in 2012.
“We…expect that investment activity will start in inner ring suburbs such as Bondi, Newtown and Neutral Bay in Sydney, as well as New Farm in Brisbane, and North Perth in the WA capital – and gradually spread to middle ring suburbs later in the year.”
Mortgage broker aggregator AFG - which said its Mortgage Index represents around 10 per cent of the Australian market - reported that investment accounted for 35.6 per cent of all new mortgages in October. It said investors were especially active in NSW (39.2 per cent) and Victoria (38.9 per cent), with lower levels of activity in QLD (32.9 per cent) WA (32.2 per cent) and SA (29.8 per cent).
Hamish Kyle, director, Raine & Horne Neutral Bay, said he expected Sydney’s lower north shore markets will draw out investors in 2012, while population growth, supported by an immigration policy aimed at attracting skilled workers will underpin real estate values and rental returns.
In one case, a property in the suburb of Cammeray, attracted 25 groups, of which one in four were investors. This was well up on a year ago, when investors represented about five per cent of enquiries, Mr Kyle said.
Lee Paul, principal of Raine & Horne New Farm, believed the recent interest rate cut has proven a spur for inner-city Brisbane real estate.
Ms Paul said the majority of investors are looking for one to two bedroom apartments in well-maintained blocks with lower body corporate fees.
“Typically these apartment blocks won’t have extras such as lifts and swimming pools, while low vacancy rates of 2 per cent are also attracting investors to inner-city Brisbane,” says Ms Paul.
“As a result, it’s near impossible to find a rental home for less than $350 a week in New Farm. These apartments are selling for between $340,000 and $350,000.”
In Perth, Larry Gallagher, Principal of Raine & Horne North Perth, says there is a high probability that investors will play a significant role in the Perth market in 2012.
“Traditionally when the share market takes a hit, investors and those in managed funds tend to seek the relative security of residential property and decent yields,” Mr Gallagher said. Population growth would support this, he added.