‘Comfort factor’ important for property investors, new survey shows

The ‘comfort factor’ is a primary reason for investors seeking property over shares, a new survey has found. And investing in property to fund retirement is high on the list, according to the latest Homeloans Home Buyer Barometer.

The online survey of 600 consumers found that around half of those who invested in property found bricks and mortar more appealing than the sharemarket.

“We asked why people invested in property and nearly half said they felt ‘more comfortable’ with property than shares,” said Will Keall, marketing manager of non-bank lender Homeloans Ltd.

High in their reasoning were capital growth potential and rental returns.

“And when it comes to the location of a property, over two thirds consider rental demand,” Keall says. “That can be a good strategy, because these properties will also generally be attractive to other investors and even owner occupiers should they ever decide to sell.

“Top of the list, though, is a property that’s close to local amenities and transport to appeal to more tenants.”

Interestingly, the report found that nearly one third of all respondents are planning on buying an investment property in the next 12 months – plus 34% of those will be first time investment property purchasers.

“A combination of low rates, the housing market showing signs of life in various cities, and the stockmarket’s volatility means people are being attracted to buying residential property as an investment,” Keall says.

‘’There are also some generous parents out there, with a significant number investing in property because they believe it’s a good investment that can be passed on to their children.’’

Unlike owner occupiers, who on average move home once every seven years, property investors are more likely to hold onto their first investment property for around 12 years.

“Residential real estate is generally a good medium-to-long-term investment and is often seen as less volatile than shares,” Keall said. “A good residential investment property can provide an income-producing asset with a long term rental income stream, plus it can represent solid wealth creation through capital growth and, down the track, collateral security for further investment.”

Other findings of the Homeloans Home Buyer Barometer include:

• Almost one quarter purchased their first investment property when they were aged 18 – 29
• 61% prefer an investment property in a capital city, 37% in a regional city, and the remainder in a rural area
• Over half purchased a detached house for their first investment property
• Existing properties are more popular (76.1%)
• One sixth prefer a property close to where they live, so they can drive past it
• The majority (63%t) use a property manager, while over a third self manage
• 19% of respondents have a self managed super fund, just under half (45%) of whom have invested in property as part of their fund
• Those who have invested in property have an average of 1.6 properties

staylor@propertyobserver.com.au