Property investors aren’t holding their breath to see a repeat performance of last year’s price growth in Sydney and Melbourne, with a majority hoping prices won’t shoot up in the future, a new survey suggests.
A federal voting poll released Tuesday by Essential Research – which also asked respondents about the housing market and negative gearing – shows Australians are split on where property prices go from here.
It comes as the national debate on the boom and bust of the property market sparks up again, off the back of
commentators predicting a price crash.
About one third (34 per cent) of the 1000 people surveyed last month said they would like to see house prices go down, while another third (32 per cent) would like them to go up.
Even among the investor segment, a quarter of those surveyed actually wanted prices to drop, while more than half (55 per cent) either wanted prices to stay much the same, go down a little or go down a lot.
While investors may be acting altruistically, most are likely concerned about what would happen to their investments if the market crashed following last year’s exceptional price growth, experts say.
“The logic may be, ‘if prices keep going up, it may mean they crash’,” AMP Capital Investors chief economist Shane Oliver said.
“It may be a wariness about having too much of a good thing.”
Dr Oliver said investors in Sydney and Melbourne would likely see it as healthy if the market came down slightly, because it would decrease chances of a sharp fall.
Angie Zigomanis of BIS Shrapnel agreed, saying investors were not just concerned prices were too expensive, but that they had also overshot the mark and created the potential for a crash.
“That’s the concern – the bigger boom, the bigger bust,” Mr Zigomanis said.
He said demographics would likely play into the decision; older investors with smaller mortgages or those with children wanting to enter the property market themselves would have more capacity to act altruistically.
The study showed the age bracket most likely to want to see a drop in prices was 18 to 24 years old (51 per cent). The political persuasion of those most likely to want a drop were Greens voters (44 per cent), followed by Labor voters (35 per cent) and then Coalition voters (32 per cent).
Allen Wargent Property Buyers principal Pete Wargent said net buyers (investors who buy more than they sell) would also benefit from a
drop in prices.
“If you are a multiple investor, then if prices fall, it would actually reduce your average purchase cost,” Mr Wargent said.
“It seems counter-intuitive. but if prices fall, it’s actually a good thing for you because you get to buy at a cheaper price and ultimately your returns will be better.”
But he said that in his experience, portfolio investors generally rather see capital gains.
Meanwhile, 65 per cent of investors polled said they approve of
negative gearing, while 41 per cent of all respondents want the tax break to stay.
Those most likely to approve of
negative gearing were Liberal/National voters (55 per cent), while 47 per cent of Labor voters disapproved.