Smart Property Investment & PIPA

Property Investor Sentiment Survey

October 2014

Research Findings Report

Research Methodology

• Quantitative research: an online survey was conducted during

August and September 2014.

• Participants were asked to complete a self-administered

questionnaire via an online portal, which included a total of 44
questions covering participants’ demographic information and their
opinions on property investment and the future prospects for the
Australian property market .

• Survey respondents were sourced from the Property Investment

Professionals of Australia (PIPA) member database and the
subscriber database of Smart Property Investment (SPI) magazine.

• A total of 627 participants completed the survey.

Survey Respondents:
Demographics
Gender and Age Group
What is your age group?
What is your gender?
66+ under 25
2.7% 2.7%

56-65
14.3%
26-35
25.1%
Female
41.7%

46-55
Male
26.3%
58.3%

36-45
28.9%

• 58.3% of the respondents were male, a slight decrease from the last survey of 2.5%,
while 41.7% were female, an increase of 2.5%.

• A majority of respondents were aged 36-45 (28.9%). 26.3% of respondents were

aged 46-55, an increase of 4.6% from the last survey.
Employment by Industry
Which industry do you work in?

Rental, Hiring and Real Estate Services

Finance and insurance services
Professional, scientific and technical services
Health care and social assistance
Construction
Education and training (incl. tertiary education)
Information media and telecommunications
Administrative and support services
Public Administration and Safety (incl. govt and defence)
Mining
Transport, postal and warehousing
Retail trade
Electricity, gas, water and waste services
Manufacturing
Other
Agriculture, forestry and fishing
Arts and recreational services
Accommodation and food services

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%

• Nearly half of the surveyed investors work in large industries (by contribution to GDP)
such as rental, hiring and real estate services (16.1%); finance and insurance services
(11.5%); professional, scientific and technical services (9.3%); and health care and social
assistance (8.3%).
Employment by Occupation
Please choose one of the following to describe your occupation

Real estate professional

Middle management
IT professional
Clerical worker/administrator
Sales and marketing professional
Technician or trades worker
Senior executive/manager
Financial professional
Analyst
Accounting professional
Community services or personal service worker
Media/information professional
Retired
Labourer
Machinery operator or driver
HR professional
Legal professional
Entertainer
Sportsman

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

• A majority of respondents were most likely to be real estate professionals (13.6%), middle
management (10.2%), or IT professionals (8.6%).
Marital Status and Number of Dependents

What is your marital status? Please indicate the number of dependents in your household
4 5+
Divorced Widowed
0.6% 2.9% 0.5%
5.1%

3
Single
7.8%
14.0%

Partner/ de facto
14.6%
2
22.7%
0
50.5%

Married
1
65.6%
15.7%

• 65.6% of surveyed respondents are married, an increase of 4.5% from the last survey,
while the percentage of respondents with a partner/de facto decreased by 3.1% to
14.6%. The number of single respondents decreased slightly by 1.5% to 14.0%.

• A majority of respondents have no dependents in their household (50.5%), an increase of

6.1% from the last survey. 22.7% of respondents have 2 dependents, a decrease of 4.1%.
Annual Household Income
What is your approximate annual household income (including rental property income)?

$100,001-$150,000

$150,001-$200,000

$75,001-$100,000

$50,001-$75,000

$200,001-$250,000

$300,001+

$250,001-$300,000

Under $50,000

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

• A majority of respondents have an approximate annual household income of

$100,001-$150,000 (27.3%).

• While in the last survey, 17.8% of respondents stated they have an annual
household income of $300,001+, only 7.8% of respondents selected that category in
this survey.
Investment Portfolio: Number of Properties
How many properties are in your investment portfolio?

2-4

5-10

Yet to buy

11-15

16-20

21+

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

• A majority of respondents (41.8%) have 2-4 properties in their investment portfolio, a slight
decrease of 1.1% from the last survey

• 20.6% of respondents have only 1 investment property, a drop of 4.1% from the last survey.
Investment Portfolio: Total Estimated Value
What is the total estimated value of your investment portfolio?

$501,000 to $1,000,000

under $500,000

$1,010,000 to $1,500,000

N/A

$1,501,000 to $2,000,000

Prefer not to say

Over $3,000,000

$2,501,000 to $3,000,000

$2,001,000 to $2,500,000

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

• A majority of respondents (22.3%) estimated their total investment portfolio value to be

between $501,000 and $1,000,000, a significant increase from the last survey of +6%.

• While in the last survey, nearly one quarter (24.7%) of respondents did not wish to reveal
the total estimated value of their investment portfolio, in this survey only 8.1% of
respondents preferred not to say.
Key Findings:
Investor Sentiment
Property Investment Trends: Past 12 Months
Have you purchased an investment If so, was this the first investment
property in the past 12 months? property you've ever purchased

Yes
12.6%

Yet to
purchase
Yes 27.3%
46.2%
No
53.8%

No
60.1%

• Over the past 12 months, over half the respondents (53.8%) had not purchased an investment
property.

• For those who did, 60.1% had purchased an investment property beforehand.
Property Investment Trends: The Effect of Interest Rates
Has the low interest rate environment accelerated If the low interest rate environment continues,
your decision in buying investment property? would you consider buying more investment properties?

Unsure
6.8% Unsure
17.3%

No
7.7%
No
38.5% Yes
54.6%

Yes
75.0%

• A clear relationship can be seen between low interest rates and the purchase of investment
property. 54.6% of respondents felt their purchase decision was accelerated by the low
interest rate environment.

• Three quarters of respondents (75.0%) believed that a continuation of the low interest rate
environment will increase the likelihood of their buying more investment properties. This was
a slight increase of 2.3% from the last survey.
Property Investment Trends: Perceptions of Investors
Do you believe now is a good time Why is investing in property the most
to invest in property? attractive investment choice right now?
Other (please specify)
4.0%

Unsure
13.4%

No
7.0%
Stability compared to Low interest rates
other assets 30.1%
21.8%

Property prices
7.2%
Government incentives
Yes 2.1%
79.6% Capital growth
opportunities
Rental income 24.8%
opportunities
10.5%

• 79.6% of respondents believed it is now a good time to invest in property. This is a decrease
from the last survey of 4.8%. Only 7.0% of respondents felt it was not a good time, while
13.4% were unsure.

• Low interest rates were the most popular reason for property investment nominated in this
survey, at 30.1%, reflecting the low official cash rate set by the RBA at 2.5%. Capital growth
opportunities were the second most attractive reason for property investment at 24.8%.
Investor Sentiment: Next 6-12 Months
Are you looking to purchase an investment
If so, what type of property would you buy?
property in the next 6-12 months?
I don't intend to
buy
8.5%

Unsure
19.5%
House and land
11.5%

No
12.6% Houses
Units 51.0%
Yes 20.5%
67.9%

Town
houses
8.4%

• 67.9% of respondents stated they were looking to purchase an investment property in the next
6-12 months, a 2.9% decrease from the last survey.

• A majority of respondents stated that ‘houses’ were the property type they would buy
(51.0%). ‘Units’ were the second most popular choice, with 20.5%.
Property Investment Trends: Next 6-12 Months
What is your budget for the type of property
And would this property be? you are considering purchasing?
Under $100,000 $101,000 to $200,000
0.3% 4.4%
Over $1,000,000
1.1% N/A
I don't intend New build
to buy 9.0%
11.9%
8.6%
House and land
8.9%

$201,000 to $300,000
18.4%
Off the plan $501,000 to $1,000,000
5.7% 15.9%

$401,000 to $500,000 $301,000 to $400,000

20.6% 30.3%
Existing stock
64.8%

• ‘Existing stock’ was the most popular investment property type, cited by a large number of
investors (64.8%). This, however, is a decrease from the last survey of 8.6% (73.4%).

• A budget of $301,000-$400,000 was the most common among survey respondents, at 30.3%,
while a budget of $401,000-$500,000 was also popular (20.6%). Together, these responses made
up over half the replies.
Property Investment Trends: Places that offer the Best
Investment Prospects
Which state capital do you believe currently
Where is the most appealing place to buy right now?
offers the best investment prospects?
Mining towns
Hobart Canberra Darwin
1.0%
1.7% 0.5% 3.7%
Coastal Adelaide
locations 5.4% Sydney
8.4% 13.4%

Perth
Regional markets
8.6%
25.4%
Melbourne
11.1%

Metropolitan markets
65.2%

Brisbane
56.0%

• Metropolitan markets grew in popularity to 65.2% as the most appealing place to buy right
now, an increase of 3.4% from the last survey, followed by regional markets at 25.4%.

• 56.0% of respondents believed Brisbane to offer the best investment prospects currently, an
increase of 7.7% from the last survey. In addition, 13.4% of investors felt Sydney was the
second most popular state capital.
Property Investment Trends: Popularity of States
Please list the states where you intend to buy your next investment property

NT
6.4%
ACT NSW
6.6% 20.1%
TAS
7.2%

WA
11.9% Vic
15.9%

SA
10.0%

Qld
22.0%

22% of respondents intended to purchase their next investment property in

Queensland, while one fifth (20.1%) believed NSW would be the next state in
which they would purchase an investment property. Victoria was also viewed
as a popular state, with 15.9% popularity from respondents.
Key Findings:
Purchase Behaviour
 Common Traits of a Property Investor
Which of the following best describes As a property investor,
I don't have time to you as a property investor? which of the following worries you most?
think about it - my
property buyer
looks after
everything for me
6.1% Other (please
specify)
10.0%
Damage to
I monitor property
property
listings constantly
19.4%
for the right
property, but I
rarely purchase
I select properties
21.3%
carefully based on a Losing a tenant
long-term Not being able to 16.1%
investment strategy meet your loan
60.2% obligations
If I see a good 40.7%
property I jump on Not being able to
it - even if I wasn't sell your property
planning on 12.9%
investing
12.4%

• 60.2% of respondents believed they selected ‘properties carefully based on a long-term

investment strategy’. Further, a majority of respondents felt that ‘Not being able to meet your
loan obligations’ was their biggest worry as property investors (40.7%).
Common Traits of a Property Investor
Do you primarily invest in property for capital growth, rental What percentage of your total investment base is property?
income or tax purposes?
10%-20%
4.3%
I don't 0%-10% 20%-30%
Tax invest 5.6% 6.1%
purposes 6.6%
7.1%

Rental income
28.0%

Capital growth
64.9%

Over 50%
77.4%

• A majority of respondents invested in property for capital growth (64.9%),

while over one quarter invested to obtain rental income (28.0%).

• Over three quarters of respondents’ total investment base was comprised of

property (77.4%).
Property Investors: Asset Portfolio
Why, in your opinion, is property a better
What other asset classes do you currently investment than other assets?
have in your total investment portfolio?
I don't think it's better
Gold 2.4%
3.3%

Better passive More control

income 16.6%
13.2%
Cash Shares
35.2% 42.1% More tangible
Better long term returns 12.0%
22.3%

Less volatile
18.3%
I understand it is
better
Managed funds
15.2%
19.5%

• Respondents who invested in other asset classes invested primarily in shares

(42.1%) and/or cash (35.2%). 19.5% of respondents had managed funds in their
investment portfolio.

• A relatively even distribution of reasons was given for why property was a better
investment than other assets, with ‘Better long-term returns’ the most popular
among respondents (22.3%).
Property Investors: Risk Proclivity
As a property investor, how would you describe In more general terms, what is your overall appetite
your risk profile? for risk when it comes to investing?
Very high Very high Very low
0.8% 4.3% 5.6%

High Very low

9.7% 7.3%

Low
26.1%
Low
38.0%

Medium high
51.5%

Medium
55.8%

• Over half the respondents claimed to have a medium risk profile as a

property investor (55.8%), while over a quarter (26.1%) described themselves
as low-risk property investors. This could be a reflection of the market or the
risk avoidance practices undertaken by responding property investors.

• In addition, more than half the respondents claimed to have a ‘medium high’
appetite for risk when it came to investing in general (51.5%).
Top 10 Research Elements when Investing in Property
What are the most important elements you research when you invest in property?

Rental income/yield

Capital growth

Existing infrastructure

Vacancy rates

Proposed infrastructure

Population growth

Local transport

Area's employment prospects

Affordability

Schooling/education options

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

• Rental income/yield (85.5%) and ‘Capital growth’ (82.0%) were considered the top two most
important elements investors research when investing in property.

• Results also suggest most of the elements in the top 10 list, such as ‘Employment prospects’,
‘Affordability’ and ‘Schooling/education options’ were the key factors that determine potential
tenants’ decisions on renting and the price they are willing to pay.
Investors’ Biggest Concerns
What is your biggest concern when investing in property?

The property not going up in value

Being able to afford it

Getting tenant in the property

Purchasing a lemon

Getting poor advice

Paying off loan/debt

Property management (e.g. repairs and maintenance)

Being ripped off

Interest rate might go up

Not knowing whom to get advice from

Tenant management (e.g. rent collection)

Not knowing what I'm doing

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

• A little more than a fifth of surveyed respondents (20.5%) indicated ‘The property not going up
in value’ was their biggest concern when investing in property. Most of these reasons
stemmed from the significant capital outlay involved in property investment.

• The next most cited reason for concern was whether or not an investor would be able to
afford the property (12.1%).
Investors’ Belief in Property Investment
Why do you believe investing in property is a good
investment choice in the long term?

Capital growth

Personal wealth creation

Reliable income

Gearing/financial leverage

Tax benefits

Less risk than other investments (e.g. shares)

Generational wealth creation

Stability

Low volatility

Affordability

Other (please specify)

I don't believe it is a good investment

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

• 71.0% of respondents stated that investing in property is a good investment choice in the long
term because of ‘Capital growth’, a decrease of 6.2% from the last survey. Further, 65.9% of
investors nominated ‘Personal wealth creation’ as their reason, a decrease of 3%.
Investors’ Selection Criteria
What are the most important factors for you when
it comes to selecting an investment property?

Location
Capital growth prospects
Rental return
Access to public transport
Access to a number of local amenities
Area demographics
Proximity to major city
Land size
Age of property
Neighbourhood appeal
Number of bedrooms
Street appeal
Style of dwelling
Other (please specify)

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

• As with the last survey, ‘Location’ (79.8%), ‘Capital growth prospects’ (76.9%) and ‘Rental
return’ (72.8%) were the three most important factors considered when respondents were
selecting an investment property.

• While factors that are important to prospective tenants, such as ‘Access to public transport’
(49.6%), ‘Access to a number of local amenities’ (45.3%) and ‘Area demographics’ (35.2%),
were also significant factors, this was considerably less so than the top three.
Key Findings:
Property Management and
Investment Funds
Managing Investment Property
Do you manage your investment properties
or employ a property manager?

N/A
11.3% Self-manage
11.8%

Property manager
76.9%

• More than three quarters of respondents (76.9%) employed a property manager to manage
their investment properties. This was an increase of 6.7% from the last survey.
Managing Investment Property

Which professionals have you sought services from in the past?

Mortgage broker

Accountant

Lawyer/conveyancer

Property investment adviser

Property marketer/selling agent

Financial planner

Buyers agent/advocate

I didn't seek advice

Other (please specify)

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%

• Respondents have sought services from various other professionals in the

past, including ‘Mortgage brokers’ (70.0%) and ‘Accountants’ (65.7%), both of
which are increased percentages from the previous survey.
Managing Investment Loans
Over the past 12 months how have you found
managing your loan repayments?

Very difficult
0.5%
N/A
Difficult
10.6%
2.6%
Very easy
24.9%

OK
35.3%

Easy
26.2%

• Survey findings suggest most investors have not had any difficulty in managing their loan
repayments over the past 12 months. As shown in the results above, more than 80% of
respondents indicated managing their repayments has been ‘OK’ (32.9%), ‘Easy’ (24.5%) or
‘Very easy’ (23.2%). These were all consistent with last survey’s results. Only a very small
proportion of respondents have found managing their loan repayments ‘Difficult’ (2.4%) or
‘Very difficult’ (0.5%).
Method to Secure Investment Loan
How did you secure your last investment loan? How do you intend to secure finance for
your next investment loan?
Other (please
specify), 1.7% Other (please
N/A specify)
2.9% 4.6%
N/A, 9.5%

Directly from a Directly from a bank

bank, 30.5% 25.6%

Directly from a
credit union
Through a mortgage 1.4%
broker, 54.5% Directly from a Through a mortgage
credit union, broker
2.9% 65.5%

Directly from a
building society,
0.8%

• Over half the respondents (54.5%) decided to secure their last investment loan through a
mortgage broker, an increase of 1.5% from the last survey. In addition, 30.5% secured their
investment loans directly from the bank, an increase of 1.5% on the last survey.

• When asked how they intend to secure finance for their next investment property, 65.5%
indicated they intend to do so through a mortgage broker (an increase of 2.7% from the last
survey) and 25.6% would prefer to get their loan directly from a bank (a decrease of 2.1%),
indicating the demand for mortgage brokers’ services is continuing to rise.
Investing in Property via SMSFs
Have you invested in property via a Are you planning to purchase a property via your
self-managed super fund (SMSF)? SMSF within the next 12 months

Yes
14.3% Yes
21.4%

No
No 78.6%
85.7%

• The results shown above indicate a growing trend of purchasing investment property via self-
managed super funds (SMSFs). As shown, 14.3% of respondents stated they had invested in
property via an SMSF before, a significant increase from the last survey of 4.4%.

• Additionally, 21.4% of surveyed investors plan to purchase their property via an SMSF within
the next 12 months, an increase of 4.0% from the last survey.

• This indicates the growing popularity of SMSFs among property investors.

Property Investment: Standards and Security
Should the Government be doing more to protect investors Do you believe people who recommend property investment
against property spruikers? should require a license?

No
No 13.1%
19.8%

Yes
80.2% Yes
86.9%

• 80.2% of respondents said the Government should be doing more to protect

investors against property spruikers, indicating possibly that respondents feel
not enough is being done and more stringent policies should be implemented.

• An overwhelming majority of respondents (86.9%) believed that people who

recommend property investment should need a licence to do so.
Property Investment: Declarations
Should people assisting in property purchases declare all commission
payments/clawbacks?

No
8.1%

Yes
91.9%

• 91.9% of respondents stated that people assisting in property purchases

should declare all commission payments and clawbacks in order to improve
transparency and stability in the property investment market.