Targeting Property Investors in Australia 2008

Find Industry reports, Company profiles
ReportLinker and Market Statistics

>> Get this Report Now by email!

Targeting Property Investors in Australia 2008
Published on January 2009

Report Summary

Introduction

Australia has internationally high levels of investment property ownership, and investor loans constitute a significant proportion of the
mortgage market. However, the currently turbulent global economic conditions have led to a decline in investment property lending
commitments over the last year. Nevertheless property investors will continue be an important customer segment.

Scope

*Includes a comprehensive overview of the investment property market in Australia.

*Provides survey data on consumer attitudes and behavior relating to investment property and investor loans.

*Provides five year forecasts of investment property lending commitments.

*Analyzes current and future trends in the market.

Highlights

More recently, falling property prices and lower interest rates have also contributed to rising rental yields on investment properties.
However, yields are still low for some types of investment properties, with top-end investment properties having very low yields.

Since investment loans on average use higher gearing, and since property investors are seen as a somewhat more risky group of
mortgagors by providers, the credit crisis has affected investors to a greater degree than owner occupiers.

Indirect property ownership can provide a convenient alternative to gain exposure to the residential property market. There are
several theoretical advantages to indirect property ownership.

Reasons to Purchase

*Detailed analysis of investment property ownership in Australia.

*Profiles different categories of Australian property investors.

*Plan your strategy with Datamonitor forecasts of investment property lending commitments up to 2013.

Table of Content

Targeting Property Investors in Australia 2008 Page 1/7


Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market context 2
Investment property ownership is widespread in Australia 2
Several factors have contributed to the popularity of property investment 2
Consumer focus 2
Property investors have distinct demographic and attitudinal features 2
First-time property investors require more guidance when getting a mortgage 3
Property investors and the credit crisis 3
Australian interest rates have recently fallen rapidly 3
Property prices have recently fallen in many areas 3
Although yields have risen they are still low for some types of investment property 3
Competitive dynamics 4
CBA is the largest brand when it comes to investor loans 4
The large banks have gained market share at the expense of other providers 5
Future focus 5
The global credit crunch will continue to affect the market in the near term 5
Indirect property ownership will eventually become more common 5
In the long term, property ownership will become more concentrated 6
Table of Contents 6
Table of figures 7
Table of tables 8
Market Context 9
Investment property ownership is widespread in Australia 9
More than 10% of households have an investment property 9
Property investment accounts for a high proportion of mortgage borrowing 9
The value of outstanding loans to property investors represented 31.9% of total housing loans outstanding in September 2008 11
Renting has become more common 13
Several factors have contributed to the popularity of property investment 16
Investors are looking for capital gains 16
Negative gearing provides tax incentives for investment property ownership 17
The absence of rent control makes investment properties more attractive 18
Financial innovations have made it easier to get credit 18
Cultural factors contribute to the demand for investment property 18
Investment property seminars have spread the word about property investment 18
Traditionally, Australians would buy an owner-occupied property first 19
There are several factors which favors first buying owner-occupier property 19
Many first-time property buyers now buy an investment property while renting 20
Consumer Focus 21
Property investors have distinct demographic and attitudinal features 21
Property investors are older, higher educated and have higher incomes 21
Investors with several properties have even more pronounced characteristics 23
Empty nesters are becoming an important target group 23
Property investors are more optimistic compared to those without investment property 24
Investors are less likely to be very satisfied or dissatisfied with their mortgage provider 25
Property investors can be split into two distinct groups 26
First-time property investors require more guidance when getting a mortgage 26
First-time property investors are more likely to go to a mortgage broker 27



More experienced property investors are easier to convert to online applications 28
Property Investors and The Credit Crisis 29
Australian interest rates have fallen but property prices are uncertain 29
Interest rates have recently fallen rapidly 29
Mortgage rates have fallen too 30
Property investors are commonly more highly geared 31
Property prices have recently fallen in many areas 32
Although yields have risen they are still low for some types of investment property 33
The credit crisis has affected both owner-occupiers and property investors 33
Mortgage providers are now less willing to provide credit 33
There are ways that the credit crisis has benefited prospective property investors 33
Competitive Dynamics 34
CBA has the highest market share of Australian property investor loans 34
CBA is the largest brand when it comes to investor loans 34
'The Big Four' now account for over three quarters of outstanding investment loans 35
The largest banks vary in their propensity to offer investment loans 36
CBA has grown its investment loan book over the last five years 37
The large banks have gained market share at the expense of other providers 38
Credit unions and building societies account for a small and falling market share 38
Securitization vehicles' share of the market has fallen rapidly 39
Future Focus 40
The global credit crunch will continue to affect the market in the near term 40
The property investment market has suffered from the global credit crunch 40
Lending commitments in 2008 have been lower than in 2007 40
Financial institutions will increasingly focus on property investors 41
Some types of property investors could be targeted more effectively 41
Regulatory changes threaten to impact property investors 42
Although investment property regulations are favorable, this could change 42
Indirect property ownership will eventually become more common 42
Indirect property ownership has several advantages 42
Residential property derivatives have recently been launched 44
Property ownership will become less emotionally charged 44
With time, attitudes will gradually change 44
In the long term, property ownership will become more concentrated 44
Renting your home will become more common 44
Apartments will become more common 44
Fewer property owners will hold more property 45
APPENDIX 47
Supplementary data 47
Definitions 70
Balances outstanding 70
CAGR 70
Cash rate target 70
Gross advances 70
Lending commitments 70
Mortgage manager 70
Methodology 70
Further reading 70
Ask the analyst 71
Datamonitor consulting 71



Disclaimer 71
List of Tables
Table 1: Monthly ADI lending commitments, 1992-99 (Table 1 of 2) 47
Table 2: Monthly ADI lending commitments, 1999-2008 (Table 2 of 2) 48
Table 3: Proportion of ADI lending commitments that are for investment housing, 1992-2001 (Table 1 of 2) 49
Table 4: Proportion of ADI lending commitments that are for investment housing, 2001-08 (Table 2 of 2) 50
Table 5: Outstanding ADI housing loans, 2002-08 51
Table 6: Proportion of outstanding ADI housing loans that are for investment loans, 2002-08 52
Table 7: Renter dwellings and proportion of all dwellings, 1976-2006 53
Table 8: International comparison of residential property gross rental yields, 2003 53
Table 9: Intrastate comparison of residential property gross rental yields, July 2008 53
Table 10: Reasons for investing in or renting out most recently acquired property, 2003 54
Table 11: Housing arrangements of property investors and others, December 2007 54
Table 12: Age distribution of property investors and others, December 2007 55
Table 13: Demographic profiles of property investors and others, December 2007 55
Table 14: Economic outlook of property investors and others, December 2007 56
Table 15: Mortgagor satisfaction with mortgage provider, December 2007 56
Table 16: Attitudinal profiles of property investors and others, December 2007 57
Table 17: Proportion of mortgagors that used a mortgage broker for main mortgage, December 2007 57
Table 18: RBA official cash rate target, 1993-2008 58
Table 19: Average indicator lending rates, 1999-2007 (Table 1 of 2) 59
Table 20: Average indicator lending rates, 2008 (Table 2 of 2) 60
Table 21: Average gearing of different property types, 2003 60
Table 22: Price index of established homes in capital cities, 2002-08 61
Table 23: Outstanding investment loans on the books of major banks, October 2008 61
Table 24: Outstanding ADI investment loan market share by institution, October 2008 62
Table 25: Outstanding investment loans by institution, October 2008 62
Table 26: Outstanding investment loans by institution, 2004-07 (Table 1 of 2) 63
Table 27: Outstanding investment loans by institution, 2007-08 (Table 2 of 2) 64
Table 28: Credit unions and building societies proportion of outstanding ADI loans by type, 2002-05 (Table 1 of 3) 65
Table 29: Credit unions and building societies proportion of outstanding ADI loans by type, 2005-08 (Table 2 of 3) 66
Table 30: Credit unions and building societies proportion of outstanding ADI loans by type, 2008 (Table 3 of 3) 67
Table 31: Securitization vehicles' outstanding loans and market share, 2002-08 68
Table 32: Yearly ADI lending commitments for investment housing and forecasts, 2003-13 69
Table 33: Average price of real estate investment trust index XPJ 69
Table 34: Housing types in 2006 69
List of Figures
Figure 1: CBA has the highest value of investment loans on its books, October 2008 4
Figure 2: Monthly lending commitments have increased strongly, 1992-2008 10
Figure 3: Investment lending accounts for a high proportion of mortgage lending, 1992-2008 11
Figure 4: Outstanding mortgage loans have grown strongly in Australia, 2002-08 12
Figure 5: Investor loan proportion of outstanding loans peaked in 2004, 2002-08 13
Figure 6: Renting has become more common, 1976-2006 14
Figure 7: Rental yields in Australia fell to a very low level by international standards in 2003 15
Figure 8: Rental yields vary strongly in different locations, July 2008 16
Figure 9: Negative gearing is an important motivation for property investors 17
Figure 10: Many property investors are not owner-occupiers 19
Figure 11: Property investors are most likely to be aged between 45 and 54 years old 22
Figure 12: Investors with several properties have pronounced demographic characteristics 23
Figure 13: Property investors are more likely to believe that general economic conditions will improve 24



Figure 14: Property investors are more likely to believe that personal economic conditions will improve 25
Figure 15: Property investors have less polarized views of their mortgage provider 26
Figure 16: Attitudes differ between investors with varying degrees of experience 27
Figure 17: Property investors are more likely to have used a mortgage broker 28
Figure 18: Interest rates have recently been cut sharply in Australia, 1999-2008 29
Figure 19: Average bank mortgage rates have fallen recently, 1999-2008 30
Figure 20: Median gearing varies by property type 31
Figure 21: Australian property prices have recently fallen, 2002-08 32
Figure 22: CBA has the highest value of investment loans on its books, October 2008 34
Figure 23: Outstanding investment loans are concentrated in a few large institutions, October 2008 35
Figure 24: Investment loans' absolute and relative size varies between the large banks, October 2008 36
Figure 25: CBA has the highest growth rate of outstanding investment loans, 2004-08 37
Figure 26: Credit unions and building societies have a small market presence 38
Figure 27: Securitization vehicles' market share is falling rapidly 39
Figure 28: ADI lending commitments for investment housing and Datamonitor forecasts 41
Figure 29: The A-REIT index XPJ has slumped over the last year, 2003-08 43
Figure 30: Separate three bedroom houses are the most common housing arrangement, 2006 45



Fax Order Form
To place an order via fax simply print this form, fill in the information below and fax the completed form to:
Europe, Middle East and Africa : + 33 4 37 37 15 56
Asia, Oceania and America : + 1 (805) 617 17 93
If you have any questions please visit http://www.reportlinker.com/notify/contact

Order Information
Please verify that the product information is correct and select the format(s) you require.

Targeting Property Investors in Australia 2008

Product Formats
Please select the product formats and the quantity you require.

Digital Copy--USD 2 795.00 Quantity: _____

Contact Information
Please enter all the information below in BLOCK CAPITALS

Title: Mr Mrs Dr Miss Ms Prof

First Name: _____________________________ Last Name: __________________________________

Email Address: __________________________________________________________________________

Job Title: __________________________________________________________________________

Organization: __________________________________________________________________________

Address: __________________________________________________________________________

City: __________________________________________________________________________

Postal / Zip Code: __________________________________________________________________________

Country: __________________________________________________________________________

Phone Number: __________________________________________________________________________

Fax Number: __________________________________________________________________________



Payment Information
Please indicate the payment method, you would like to use by selecting the appropriate box.

Payment by credit card Card Number: ______________________________________________

Expiry Date __________ / _________

CVV Number _____________________

Card Type (ex: Visa, Amex…) _________________________________

Payment by wire transfer Crédit Mutuel
RIB : 10278 07314 00020257701 89
BIC : CMCIFR2A
IBAN : FR76 1027 8073 1400 0202 5770 189

Payment by check UBIQUICK SAS
16 rue Grenette – 69002 LYON, FRANCE

Customer signature:

Please note that by ordering from Reportlinker you are agreeing to our Terms and Conditions at
http://www.reportlinker.com/index/terms

Please fax this form to:

Europe, Middle East and Africa : + 33 4 37 37 15 56

Asia, Oceania and America : + 1 (805) 617 17 93


Targeting Property Investors in Australia 2008

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (8)

More from ReportLinker.com

More from ReportLinker.com (20)

Recently uploaded

Recently uploaded (20)

Targeting Property Investors in Australia 2008