Confidence grows in property sector
Spurred on by the growing interest of self-managed super funds (SMSFs), confidence is slowly beginning to return to the Australian property investment sector as investors become more open to looking for investment opportunities outside of their locality.
Despite the uncertainty over whether the major banks will pass on the Reserve Bank of Australia's (RBA's) expected interest rate cut, Chan & Naylor director Ken Raiss said a greater number of mum and dad investors were putting their money into property because they regarded it as "more stable than the stock market or simply putting their money into savings".
"We're setting up more structures for SMSFs to buy property, we're seeing more activity from clients refinancing to pull some equity out to help them fund another acquisition, and we're seeing an increase in the number of attendees attending our property investment workshops," he said.
Raiss added that there was the likelihood of a new property cycle as interest from both seasoned and new investors grew, and Australians became more willing to look "beyond their backyards" for better investment returns.
"People are a lot more savvy in terms of what property they'll buy," he said.
According to Chant & West, a superior property is one that grows on average 10 per cent annually, and which doubles a property's value up to seven years earlier than an average property growing at 5 per cent annually.
"For property investors looking for less financial risk and greater surety of equitable return, treating property investment as an exercise in financial diligence rather that of the heart is an important development in this market," Raiss said.
Raiss stated that the major banks' reluctance to increase lending while maintaining their interest rates above that of the RBA seemed counterintuitive to the growth of the Australian economy as a whole, and he called for the Government to introduce a banking sector price regulation authority.
"Ultimately the biggest stimulus for the Australian economy is healthy competition between banks," he said.
Recommended for you
Investment solution provider Channel Capital has appointed James Archer as its latest distribution director, joining from Pinnacle Investment Management.
Bennelong Funds Management has signed a memorandum of understanding with US private credit manager Monroe Capital to distribute its products in Australia.
Global equity manager Talaria Capital has appointed a Sydney-based sales director as it grows its distribution presence across Australia.
Global private markets firm Partners Group has launched an evergreen fund to provide Australian advisers with access to its cross-sector royalties strategy.
