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The Australian Property Investor (API) released its Property Sentiment Report for quarter one (ended 31 March) and said that Queensland, Western Australia, and NSW were seen as having the best investment opportunities by 76 per cent of investors.
The report surveyed 609 respondents (including seasoned investors, rentvestors, first-time investors, owner-occupiers, and renters) between 2 April 2024 and 23 April 2024. The survey found that 32 per cent of investors saw Queensland as having the best investment prospects, followed by Western Australia (24 per cent) and NSW (20 per cent).
The report said that 25 per cent of respondents identified Western Australia as having the strongest capital growth opportunities in the coming year, almost doubling from 12 months ago when only 12 per cent of investors noted Western Australia as having the strongest growth opportunities.
While 76 per cent of respondents noted Queensland, Western Australia, and NSW as having the best investment opportunities, only 58 per cent had investment properties in that area. The report said this suggests a “strong interest in interstate investment”.
In contrast to the well-performing states, Victoria only had 9 per cent of investors say it as having the best investment prospects, followed by South Australia (8 per cent), the ACT (3 per cent), Tasmania (2 per cent), and the Northern Territory (2 per cent).
The report said that interest in Victoria had declined due to “weak” capital growth in the last 12 months and “a perception that government policy is weighted against landlords and investors”.
The sentiment report also found that 22 per cent of respondents said their main financial priority over the next 12 months was to purchase an investment property. A further 7 per cent of respondents said they wanted to improve their rental returns, almost doubling from Q4 2023.
For the first time in 12 months, the sentiment survey said that the proportion of respondents concerned about interest rates has declined since the previous quarter; however, it remained the top factor influencing decision making in regard to property.
The report said that if lenders increased interest rates by only 0.25 per cent, buying and selling intentions would shift significantly, with 33.6 per cent of respondents saying it would change their buying intentions, and 34.8 per cent of respondents saying it would change their selling behaviour.
The number of buyers saying that increased interest rates would affect their buying behaviour has decreased; however, from a year ago, 42 per cent of respondents said it would affect their intentions when interest rises were occurring every month.
Detached houses remain at the top of the list for investors, as 39 per cent of respondents said they would prefer to purchase a detached home in the next year. This is up significantly from the beginning of 2023, when only 21 per cent of survey respondents said detached houses as their preference.
Apartments and units followed as the second most preferred type of home, with 23 per cent of investors choosing apartments as their buying preference, followed by town houses/villas (18 per cent), commercial assets (5 per cent), and vacant land (5 per cent).
The report said that 27 per cent of respondents intend to buy in the next 12 months, the most popular choice among respondents. Only 13 per cent planned to sell, followed by 12 per cent planning to lease.
One respondent said that the government needed to offer more incentives to encourage Australians into the investor market. The respondent said: “The government needs to offer more incentives to mum and dad investors to encourage them to re-enter the market because at the moment there are too many rules supporting the tenant and too much tax applied to investment properties.”
However, the NSW government confirmed that it would ask property owners to pay for the state’s emergency services and may look to increase taxes on foreign investors.
[Related: NSW may increase foreign investor taxes]
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