Investors eye residential property

In its Annual Investor Sentiment Survey 2019, peak property investment body Property Investment Professionals of Australia (PIPA) says 82 per cent of investors believe now is a good time to invest in residential property, up from 77 per cent the previous year.

The survey gathers responses from 1200 property investors each year.

Seventy-five per cent of investors said the Australian Labor Party's proposed changes to negative gearing and capital gains tax influenced their voting decision.

More than half (59 per cent) of those surveyed also considered securing funding from non-bank lenders in the wake of the Banking Royal Commission; 26 per cent cited increased borrowing power as the top reason for considering non-bank finance.

Property finance expert and Savvy chief executive Bill Tsouvalas said the resilience of the non-bank lending and broking sector has given investors a "real reason" to bypass the banks and look elsewhere.

"In the wake of the royal commission highlighting poor behaviour and the tightening of credit around the banking sector, investors who want to enter the market are looking to non-bank lenders and brokers to secure their funding," Mr Tsouvalas said.

"It could signal that the age of 'big four' dominance in funding property investment is coming to an end."

Last July, The Australian Prudential Regulation Authority issued guidance about loan serviceability that gives lenders the ability to decide their own interest rate floor.

In concert with record low interest rates set by the Reserve Bank, Mr Tsouvalas said it seems there has never been a better time to get into the property market "lest investors 'time' the market, which could cost them".

He said PIPA research in September last year indicated investors who attempt to time the market could lose an average of $140,000.

The analysis looked at a 15-year stretch of data to determine whether investing in the market over time or "timing it right" produced the best results.

As markets can be influenced by many factors such as changes in government, price fluctuations, interest rate cycles, and spikes in both supply and demand, Mr Tsouvalas said selecting the best markets to invest in the short-term is out of reach for most laypeople.