Media release

Thursday, 1 December 2011

2012 set to be year of the investor, says Raine & Horne

• Investors already represent up to 50% of enquiries
• More interest rate cuts will attract investors looking for quality long term returns
• Investors set to move first on inner ring suburbs in capital cities around Australia in 2012
• In Sydney, homes valued under $600,000 will be in the sights of investors

Consistent market values, lower vacancy rates, more mooted interest rate cuts and a roller coaster share market are some of the factors set to attract cashed-up investors into residential real estate in 2012.

“Clearly, additional interest rate cuts will drive more investor money into bricks and mortar, but an easing in monetary policy also denotes an economy that is not creating enough jobs or growth,” says Angus Raine, CEO, Raine & Horne.

“Also memories of the GFC are still short, so we don’t expect an investor stampede in 2012, rather it will be more like a slow increase as savvy investors look for quality, well-located properties with long term growth and income prospects,” adds Mr Raine.

“In Sydney, price will be a driver for many investors, with the market below $600,000 set to attract a lot of interest.

“We also expect that investment activity will start in inner ring suburbs such as Bondi, Newtown and Neutral Bay in Sydney, as well as New Farm in Brisbane, and North Perth in the WA capital – and gradually spread to middle ring suburbs later in the year.”

Hamish Kyle, Director, Raine & Horne Neutral Bay, says he expects lower north shore markets will draw out investors in 2012, while population growth, supported by an immigration policy aimed at attracting skilled workers will underpin real estate values and rental returns.

That said, Mr Kyle notes the late spring 2011 market is generating positive results, which also augurs well for 2012.

“Typically the market starts to slow in late November, yet last weekend, which was very wet, we opened a property at 3/62 Carter Street, Cammeray for the very first time, and 25 groups came through.

“We quickly took three offers and exchanged on Tuesday 29 November for $565,000.

“Of the 25 groups, around 20-25% were investors, while about a year ago, investors represented about 0-5% of enquiries,” says Mr Kyle, who expects the end of NSW first home buyer stamp duty exemptions on New Year’s Day will result in more investors entering the market next year. 

Lee Paul, Principal of Raine & Horne New Farm, says the recent interest rate cut has proven a spur for inner-city Brisbane real estate.

“Over the past ten days, 20 groups have inspected 5/84 Moreton Street, New Farm, a rare, smaller refurbished three bedroom apartment,” says Ms Paul, who says around 50% of the groups were investors.

“The Moreton Street apartment is on the market for $399,000 and could command a weekly rental of $400. It is a good investment opportunity to secure a well located apartment.”

That said, Ms Paul said the majority of investors are looking for one to two bedroom apartments in well-maintained blocks with lower body corporate fees.

“Typically these apartment blocks won’t have extras such as lifts and swimming pools, while low vacancy rates of 2% are also attracting investors to inner-city Brisbane,” says Ms Paul.

“As a result, it’s near impossible to find a rental home for less than $350 a week in New Farm. These apartments are selling for between $340,000 and $350,000.”

In Perth, Larry Gallagher, Principal of Raine & Horne North Perth, says there is a high probability that investors will play a significant role in the Perth market in 2012.

“Traditionally when the share market takes a hit, investors and those in managed funds tend to seek the relative security of residential property and decent yields,” says Mr Gallagher, who reveals that a recently renovated two bedroom home unit at 10/6-8 York Street Inglewood, is attracting stout investor attention.

“Over the past few weeks there have been almost 40 enquiries for the York Street apartment, with around 60% of enquiries from investors seeking healthy rental returns.

“It’s a completely renovated apartment in a traditional 1970’s red-brick block, which is on the market for $349,000 and is expected to generate a weekly rent around $350.”

In addition, savvy investors, according to Mr Gallagher, have noted Perth’s turbo charged population growth.

The latest figures from the Australian Bureau of Statistics shows the population of the WA capital was 2.30 million on 30 June 2010, an increase of 49,100 persons, or 2.2%, over the previous year.

Nationally, the population grew by 377,100 persons, or 1.7%, to 22.34 million over the same period.*

“Population growth is a significant boost to long term capital growth,” says Mr Gallagher.

*ABS 1367.5 - Western Australian Statistical Indicators, 2010, 20/01/2011   

Raine & Horne is an iconic Australian property firm, with more than 360 offices worldwide. Also an established Superbrand along with Qantas, Vegemite, Woolworths and Myer, the company has four distinct property service brands including Raine & Horne Residential, Raine & Horne Commercial, Raine & Horne Rural and Raine & Horne Financial.

-ENDS-

For further media information contact:

Kit Bashford, National Marketing & Communications Manager on 02 9258 5400