By Michael Matusik
GOOD news for those who follow the market – Australians borrowed $200 billion to buy residential property last year. That’s just 7 per cent (or $15 billion) less than the 2007/08 market peak. That’s just 7 per cent (or $15 billion) less than the 2007/08 market peak.
Investing in property has always been on the radar for many Australians as a way to gain wealth and financial security. And throughout 2012, Aussie investors were in hot pursuit of those goals, borrowing $84 billion to purchase around 425,000 properties.
This is in spite of the negative commentary and pall of gloom that had been cast over our residential market by some observers.
Investors appear to be cautiously returning to the market and the signs are there that this group is set to expand.
So just who are Australian investors? Interestingly, most investors, according to ASIC, do not see themselves as investors at all; and only a minority seek professional advice as a first step.
A recent survey has found that the majority of Australian residential property investors are in their 20s, 30s, and 40s.
For the most part, they are married professionals who own around two properties and live in the same geographic region as their investment properties.
A combination of falling interest rates and strong rental returns is playing a significant role in luring these folk back into the market.
That same combination is also now attracting younger, single investors, who understand that the caveats requiring two incomes to service a mortgage have been eased.
Simply, with variable interest rates below 6 per cent and the prospect of strong rental returns, more singles are able to invest comfortably in property.
If the right investment property is purchased in a good growth area, in many cases the mortgage can be comfortably supported by income from the rental.
For new or almost new property, there are, of course, attractive depreciation advantages to be claimed.
Agents are also reporting a growing trend in Gen Y investors, who choose to rent in their living location of choice – such as the CBD, close to a cafe precinct, or perhaps at the beach – and who purchase investment properties to rent out in more affordable areas.
There is also a growing movement, of people using their self-managed super funds to purchase property.
And more, with word that Canberra is planning a superannuation tax – the federal government is vicariously encouraging people to exit super and use the tax benefits of housing via the residential home or negative gearing.