New research shows that while 54% of property investors consider a potential property market crash as a concern, only 22% select it as their main concern. Could the changing market actually be the perfect time to buy?
With so much speculation in the air regarding the Australian property market, investors are certainly starting to think about where their portfolios stand and where to next. Research from Australian fintech startup TaxTank shows that investors are of two minds – while 54% list property market crash among their top three concerns, only 22% list it as their primary concern.
The data also shows that property market crash concerns are higher among younger investors, indicating that those who have been in the property market longer are potentially seeing these changes as part of the ebb and flow of investing, or even as an opportunity. With property values declining for the first time since 2020 amidst high inflation and the anticipation of continuing interest rate rises, TaxTank founder Nicole Kelly said she’s seeing more property investors wavering between buying and selling.
“Some clients see this market change as a potential buying opportunity and are watching property prices closely for a decline. It’s a real balance between managing the investment properties they have and taking the opportunity to expand their portfolios. At the moment, many are sitting on the fence waiting for the market to drop, and to see how the next few months play out,” Nicole said.
The study also found that one in five (20%) of property investors know little about their current equity position, only 34% know their cash position well, and only 21% know their tax position well. Commenting on these statistics, Nicole stressed that knowing the overall equity of your investments and understanding your cash and tax position is crucial in managing an investment portfolio, and making decisions about buying and selling.
“From our study we know solid rental returns are a major consideration in the decision-making process when buying, and rental demand is not likely to slow anytime soon. Likewise, understanding the difference between the cash and tax position, which is amplified by rental returns and depreciation, is imperative when comparing property performance. This is particularly important when considering which properties to sell,” she said.
“Knowing the available equity in each property and your portfolio as a whole ensures you never miss an opportunity, couple this with growth forecasts based on 10-year monthly average and you have a powerful decision-making tool. Whether it’s to reduce tax or set yourself up for retirement, understanding why you’re buying and holding investment property is paramount, so too is monitoring the performance of each property to ensure they are working hard for you,” said Ms Kelly.
“Reducing tax requires negatively geared property so you’ll need to know your tax position and how to maximise those soft dollar expenses like depreciation. However, knowing how much cash you need to support each property is just as important, especially if you’re planning to expand your portfolio and beef up your borrowing power.”
Whichever way they decide to go, Australian property investors are likely to have some interesting decisions to make in the coming months, with interest rates continuing to climb and property prices tipped to fall.
About the survey
The survey was commissioned by TaxTank and undertaken by Octopus Group to analyse the behaviours and sentiments of Australian property investors ahead of the 2022 tax season. In May 2022, Octopus Group conducted an online quantitative survey of 606 Australian property investors. The survey is nationally representative.
