Investors eye market opportunities

Investors eye market opportunities

27 July 2012 by Staff Reporter 0 comments

Staff Reporter

Falling term deposit rates combined with the volatile share market is driving investors back into the property market, according to one company.

Research from 1300HomeLoan found there is an increasing level of interest among customers for investment properties.

1300HomeLoan managing director John Kolenda said the flip side of low mortgage rates was low deposit rates.

“Many investors would be shocked when their term deposits matured this year and they were offered less than a five per cent interest rate to roll their deposits over,” he said.

“With the level of savings increasing and large sectors of the market like retirees reliant upon annuity security, investment property seems be coming back into view as part of their investment mix.

“Culturally, Australians love property and it appears that investors are starting to look with fresh eyes at the property market where the benefits of higher yields, tax savings and potential capital gains are much more attractive than the bank deposit rates.”

Mr Kolenda said that investors did not expect to make the huge capital gains that were achieved over the past 20 years but even modest appreciation would outperform a term deposit.

“The planets are aligning so that as term deposits become less attractive, property is relatively affordable and the cost of borrowing is very low in historical terms with cheap loans available both with variable and fixed rates,” Mr Kolenda said.

Mr Kolenda said that many Australians, especially retirees and those close to retirement, were reluctant to invest in the share market because they had seen their portfolios collapse in value during the GFC and did not want to expose themselves to that volatility again.

The latest data from mortgage broker aggregator AFG found loans for investment purposes was holding steady at one in every three new mortgages.

"But different states show marked variations," the company, which processes around 10 per cent of the country's mortgages, said in relation to its June Mortgage Index.

"NSW remains the most active among investors, attracting 43 per cent of all home loans arranged there. However first home buyers declined significantly in NSW during the financial year from 15.5 per cent of all mortgages to 10.9 per cent.

"By contrast, WA lags behind all other states in terms of investment (which comprises just 30.2 per cent of new home loans there), but first home buying activity has ramped up from 13.3 per cent to 22.2 per cent in the past 12 months, making it the strongest state for first home buyers."

Staff Reporter

Falling term deposit rates combined with the volatile share market is driving investors back into the property market, according to one company.

Research from 1300HomeLoan found there is an increasing level of interest among customers for investment properties.

1300HomeLoan managing director John Kolenda said the flip side of low mortgage rates was low deposit rates.

“Many investors would be shocked when their term deposits matured this year and they were offered less than a five per cent interest rate to roll their deposits over,” he said.

“With the level of savings increasing and large sectors of the market like retirees reliant upon annuity security, investment property seems be coming back into view as part of their investment mix.

“Culturally, Australians love property and it appears that investors are starting to look with fresh eyes at the property market where the benefits of higher yields, tax savings and potential capital gains are much more attractive than the bank deposit rates.”

Mr Kolenda said that investors did not expect to make the huge capital gains that were achieved over the past 20 years but even modest appreciation would outperform a term deposit.

“The planets are aligning so that as term deposits become less attractive, property is relatively affordable and the cost of borrowing is very low in historical terms with cheap loans available both with variable and fixed rates,” Mr Kolenda said.

Mr Kolenda said that many Australians, especially retirees and those close to retirement, were reluctant to invest in the share market because they had seen their portfolios collapse in value during the GFC and did not want to expose themselves to that volatility again.

The latest data from mortgage broker aggregator AFG found loans for investment purposes was holding steady at one in every three new mortgages.

"But different states show marked variations," the company, which processes around 10 per cent of the country's mortgages, said in relation to its June Mortgage Index.

"NSW remains the most active among investors, attracting 43 per cent of all home loans arranged there. However first home buyers declined significantly in NSW during the financial year from 15.5 per cent of all mortgages to 10.9 per cent.

"By contrast, WA lags behind all other states in terms of investment (which comprises just 30.2 per cent of new home loans there), but first home buying activity has ramped up from 13.3 per cent to 22.2 per cent in the past 12 months, making it the strongest state for first home buyers."

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
At the top of his game: how this agent evolves to stay number one

Get up close and personal with the best real estate sales agents in Australia in Secrets of the Top 100 Agents. ...

View all podcasts

Are dodgy agents being punished enough?

Yes (8.6%)
No (55%)
Only in some states (2.3%)
Not all dodgy agents are being found out (34.1%)

Total votes: 220
The voting for this poll has ended on: April 15, 2017
upcoming events
REB Awards
Sydney The Event Centre 12 Sep
REB Awards
Sydney The Event Centre 12 Sep
Melbourne The Event Centre 14 Oct
Brisbane The Event Centre 18 Dec
View all events
Do you have an industry update?