Borrowing constraints have emerged as the biggest concern for experienced Australian property investors, outweighing interest rates and prompting many to reassess how they build their portfolios, according to a new industry survey.
The inaugural Australian Investor Sentiment Report, compiled by Right Property Group from 100 investors surveyed between 1 and 15 July, found 52 per cent nominated borrowing capacity as their biggest challenge, while 43 per cent said their borrowing power had declined over the past year. The report’s respondents were overwhelmingly seasoned investors, with 94 per cent owning at least two investment properties.
Despite those pressures, investors have not abandoned the market. Forty per cent said they intended to purchase another property within the next 12 months, although confidence in residential property has weakened. Forty-four per cent expressed confidence in property over the coming year, while almost half said they were less confident than they had been 12 months earlier.
Right Property Group director Victor Kumar said the findings reflected what his business was seeing among clients.
“Investors are not losing faith in property, but they are losing access to finance – predominantly due to the recent taxation policy changes,” Mr Kumar said.
“The fundamentals remain solid, but borrowing has tightened so sharply that seasoned investors are reshaping their strategies across the board.”
The survey suggests investors are becoming increasingly cautious about price growth. Fifty-four per cent expect residential property prices to fall over the next year, while only 14 per cent anticipate any increase. Most expect only moderate declines rather than a sharp downturn.
Mr Kumar said price adjustments were already evident at the top end of the Sydney market.
“Our recent acreage property purchase illustrates this shift as we picked up the property for $3.6 million, which was significantly down from the $4.5 million list price earlier in the year,” he said.
The survey suggests investors are becoming increasingly cautious about price growth. Fifty-four per cent expect residential property prices to fall over the next year, while only 14 per cent anticipate any increase. Most expect only moderate declines rather than a sharp downturn
Right Property Group co-founder Reshmi Kumar said lower-priced markets were also softening.
“For example, townhouses in Logan, Ipswich and Beenleigh in Greater Brisbane have softened by around 10 per cent in recent months, which is creating new entry points for investors who can secure finance,” Ms Kumar said.
“There is no question that the ripple effects are national with WA-based investors now pivoting to Melbourne because of its relative affordability and a wider spread of sub-$700,000 opportunities.”
The report points to a change in what is driving investor decisions. Personal circumstances were nominated by 35 per cent of respondents as the most influential factor, closely followed by government policy at 34 per cent. Interest rates, once the dominant influence on investor sentiment, were cited by only 2 per cent.
Ms Kumar said investors were responding to changes in lending and policy rather than turning away from property altogether.
“This is not a crisis of confidence, but it is a crisis of conditions,” she said.
“Investors feel financially secure, but they feel constrained by policy settings and the new lending rules.
“They’re not asking whether property still works, but they are asking how to keep moving under the new settings.”
The findings also suggest investors are considering different asset classes. Houses remained the preferred investment, but commercial property ranked second, attracting 23 per cent of respondents despite the survey’s predominantly residential investor base.
Mr Kumar said the growing interest in commercial property reflected changing conditions.
“For a residential-focused audience, this result is striking and reflects the search for yield, stability, and alternative borrowing pathways given the changes to negative gearing and Capital Gains Tax recently,” he said.
“Despite the headwinds, investor activity remains real, with many continuing to transact.
“Fundamentally, the survey shows us that investors are currently squeezed, but they are not spooked.
“This means that the next phase of the market will be shaped by those who reset their strategy deliberately rather than reactively.”
The report also found women investors reported a steeper fall in confidence than men, although the female sample comprised only 17 respondents. Seventy-six per cent of women said they were less confident than a year ago, compared with 43 per cent of men.
Ms Kumar said the difference appeared to reflect investment timeframes rather than experience.
“Women in this sample are just as experienced as the men, but their goals often skew longer-term,” she said.
“Policy uncertainty can hit harder when your planning horizon stretches over the decades.”
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