Across Australia, investor activity is anticipated to increase as this market sector capitalises on great buying opportunities, particularly in Melbourne and Brisbane – which historically over the long term, have both been consistent growth performers. South Australia is also predicting strong growth in investor activity.
High rents and lower home values are contributing to higher rental yields, which is what the investor is focusing on at the moment. With less to gain from capital growth, investors are looking more at cash flow from rents.
The improved affordability levels will make investors and upgraders the big winners as first home buyers remain reluctant to dip their toes in the property market pool, missing out on the improved market conditions.
Nationally, 50% of members expect investor activity to increase in the coming six months, broken down by state, as follows:
WILL INVESTOR ACTIVITY INCREASE – NEXT SIX MONTHS?
Members say investors and upgraders will be the sectors where the most growth will be experienced. In Tasmania and Alice Springs, all growth is expected to come from upgraders, while in Victoria, the greater proportion of members expect it to come from upgraders. The greater proportion of Queensland and New South Wales members say most growth will come from investors, while South Australia is in line with the national average, being evenly split between the two. Western Australia is the only state where first home buyers are expected to generate the strongest growth.
STRONGEST GROWTH SECTORS
The majority of members, 81%, expect interest rates to reduce further over the coming six months, adding to improving affordability levels, which it is hoped will stimulate activity in a slow property market.
Rising unemployment and increasing living expenses, including the introduction of the carbon tax, are expected to put pressure on mortgage holders. 47% of respondents expect this will result in increased mortgage defaults in their region.
EXPECT INCREASE IN MORTGAGE DEFAULTS – NEXT 6 MONTHS
While only 2% of respondents expect the prestige market to be the most active sector in the second half of 2012, it is the entry segment of the market – less than $350,000 – which 63% of members say should show the greatest strength, followed by 35% for the middle market.
The Bargain market is expected to be the most active by the majority, if not all members, in all states except for Western Australia, where it is expected to be the middle market.
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