Investors back in property markets

Investors are expected to return to the market through the year as rising prices and yields offer an ­attractive proposition for returns.

Eva and Antone Khoury, with children Chanel and Issac. Picture: rsineh Houspian

Investors are expected to return to the market through the year as rising prices and yields in suburbia and the regions offer an ­attractive proposition for returns.

While the group is traditionally active in the inner-city apartment markets of Sydney and Melbourne, the pandemic has turned the pattern on its head. Weakening demand because of border controls, reduced tourism and the regional shift has caused property prices and yields in these areas to plummet in recent months.

The suburbs and regions are becoming attractive as prices boom and vacancy rates push below 1 per cent in some areas, making it increasingly difficult to secure a rental.

“Investors have often been the last segment of the market to start turning up,” AMP chief economist Shane Oliver said, but the shift was already happening.

“Upwards momentum in ­prices is attracting investors back to the markets, but it’s more so in the smaller cities. In Sydney and Melbourne, investors are moving into ­regional centres, houses and the outer suburbs, as opposed to the inner-city areas where there’s still a bit of a cloud hanging around because of the uncertainties around supply against a backdrop of weak demand.”

The group has been largely absent in the property market since 2019, dropping to an 18-year low in May 2020. Owner-occupiers and particularly first-home buyers filled the gap, reducing the proportion of investors in the market below 30 per cent.

Recent data from the Australian Bureau of Statistics indicates this is changing: November statistics show investor lending rose by 6 per cent ($5.6bn) month on month.

NAB said rising confidence from record low interest rates and the resilience of prices through the pandemic was spurring investors back. “We’ve seen positive signs for investors in recent months, with lending demand picking up sharply towards the end of last year,” a spokesperson said. “While we expect to see continued growth in the investor market, it’s likely to remain uneven, with demand for houses tipped to outweigh apartments.”

The most recent NAB Residential Property Survey released in November showed property professionals expected a rise in demand from investors over the next 12 months to take up a larger share of the market.

Antone and Eva Khoury hope to expand their property portfolio this year, planning to knock down their Pascoe Vale investment in Melbourne’s north to build a family home and use the equity to buy a holiday property by the water. “Last year put the brakes on us,” Mr Khoury said.

“We have stable jobs and see opportunity in the market. We were happy to take the risk but banks have been less likely to lend since the royal commission (in 2018). This might be the year they loosen up a little.”