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Sydney and Melbourne ‘out of favour’ with investors

melbourne

melbourne
Francesca Krakue 2 minute read

Less than a quarter of property investors from Sydney and Melbourne believe now is a good time to buy an investment property in their respective capital cities, a recent survey has revealed.

The national survey conducted by property investment consultancy Momentum Wealth found that although 53 per cent of respondents aim to buy or develop an investment property in the next 12 to 24 months, only 23 per cent of participants from NSW and Victoria are interested in buying in their respective capital cities.

Meanwhile, 53 per cent of respondents from Western Australia believe now is a good time to buy an investment property in Perth, while 50 per cent of respondents from Queensland think it’s a good time to buy an investment property in Brisbane.

Commenting on the findings, Momentum Wealth managing director Damian Collins explained: “Analysis from our research department shows that Brisbane, Perth and Melbourne offer plenty of good opportunities for property investors.

“Brisbane for its relative affordability, Perth as it nears the bottom of a down cycle and Melbourne because the current upcycle still has some way to go in selected areas.

“However, Sydney remains highly overheated and we would caution anyone considering buying in this market to approach any investment there with high caution.”

Aussie property investors retain bullish outlook overall

The survey showed that despite concerns over potential property price bubbles, oversupply issues and cyclical downturns, 53 per cent of respondents’ main goal currently was to grow their portfolios in the near-term.

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Mr Collins remarked that such issues are always going to be present with the cyclical nature of property markets, but investors could still find good purchases with adequate research.

“Successful investors who build large property portfolios understand the cyclical nature of property markets and take a long-term view when making their investment decisions,” he said.

“This approach allows them to put short-term white noise into context, adapt to the prevailing conditions and continue to grow their property portfolios to reach their investment goals as soon as possible.”

The results of the survey come after the Reserve Bank of Australia recently said that it is ready to take further action as property investors continue to drive housing credit growth.

In her first speech as assistant governor (financial system) at a Bloomberg breakfast event in Sydney earlier this week, Michele Bullock said there is no doubt that APRA’s investor lending curbs have addressed some of the risks in the housing market but warned more may be required.

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“In 2014, the Australian regulators took the view that risks were building in the residential housing market that warranted attention,” she explained. “There is no doubt that [their] actions have addressed some of the risks.”

“Nevertheless, early experience suggests that while the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and some other indicators we use to assess risk may fade over time.

“We are continuing to monitor their ongoing effects and are prepared to do more if needed.”

The latest ABS housing finance figures, released last week, show that investor lending was up 4.2 per cent in January to be 27.5 per cent higher over the year.

[Related: APRA on ‘high alert’ as investor lending soars]

Sydney and Melbourne ‘out of favour’ with investors
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