Investors flood back to market looking for a prestige home

Rock-bottom interest rates and a strong economic outlook have seen investors flood back to the property market across Australia, with some even targeting luxury properties. 

Able to borrow more money than ever, those in the industry say investors are favouring houses over units, pushing their limits to even buy prestige in order to capitalise on an undersupply in the market for high-end rentals.

“There are definitely more investors popping up in the housing market, more than we’ve typically had,” Ray White NSW chief auctioneer Alex Pattaro told Domain. “Although we are seeing the apartment market now bounce back and investors and first-home buyers are buying in.”

The return of investors was a great sign for the market, Mr Pattaro said, with people far more confident they will find tenants able to pay the rent after a tumultuous year for landlords throughout the COVID-19 pandemic.

Buyer’s agent and director of his self-named company, Grant Foley, said he had noticed a “pronounced uptick” in the number of Sydney-based investors coming back to the market since the start of 2021.

“Last year, my client mix was 70 per cent owner-occupiers and 30 per cent investors, but, right now, that is reversed,” Mr Foley said.

Data from the recent Australian Bureau of Statistics Lending Indicators report showed a significant rise in the number of investors returning to the market at the start of 2021. 

It found the number of loan commitments for investors had jumped by 9.4 per cent in January and by 22.7 per cent since this time last year.

Such figures though, do not represent how busy the market is for investors looking in some parts of the country.

Brisbane-based Streamline Property buyer’s advocate Melinda Jennison said the company was receiving so many inquiries from investors, they were struggling to keep up.

“Investors have been really interested since mid-January and it hasn’t stopped,” Ms Jennison said. “We’ve had really strong inquiry.”

They were particularly kept busy by interstate investors from Sydney and Melbourne, who were looking to get into the market while prices were rising, she said.

Margaret and Ziv Tasevski were interstate buyers who snapped up a home as an investment in Newmarket, in Brisbane’s inner north-west, at the start of the year.

The Wollongong-based couple, who have a few investment properties, had been looking in Adelaide and Canberra, but said the number of people at open-for-inspections was making it difficult to buy. 

“We just thought it was better value for money and we did want something closer to the city,” Ms Tasevski said. “For something like what we bought you’d end up spending an extra $2 million in Sydney.”

Ms Tasevski said they were aware of the influx of people to Queensland looking to escape lockdowns in other states and were hoping to get a good rental return.

Their home is being renovated at the moment, with hopes it will hit the rental market in the next few weeks. 

While buyers like the Tasevskis have been looking to buy closer to the city, some have been looking to splash their investment cash in prestige areas of Sydney, Melbourne and Brisbane.

Ray White Bulimba selling agent Trevor Egan said he had sold a few properties in the past few months to investors, some of whom are expatriate buyers planning to move back home once COVID-19 had passed.

One property, at 7 Jilba Street, Indooroopilly, in Brisbane’s inner west, sold for $1.93 million to an investor, before being rented out for $1500 a week.

“Investors are definitely looking for houses, the apartment market hasn’t kicked along as much yet,” Mr Egan said. “Because business executives are moving to Brisbane, investors from Sydney and Melbourne are purchasing a higher-end home for a better yield.”

In Sydney, Di Jones Lower North Shore partner Piers van Hamburg said properties were selling in prestige areas to investors.

They were taking advantage of lower interest rates and a tighter rental market as returning expatriates — moving back to the properties they owned — shrank the number of rentals available.

In February, a four-bedroom home in Sydney’s lower north shore, at 51 Ellalong Road, sold to a keen investor for about $5 million. It is now up for rent with an advertised bond of $14,000.

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51 Ellalong Road, Cremorne NSW 2090

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Mr van Hamburg said investors were looking for prestige houses, as renters looked for more space to live and to work from home.

“In time, houses are only going to get more expensive, so it’s really about investors getting higher capital gains [profit from sale],” he said.