investors 'disappointed' over quick house gain

Investors 'disappointed' over quick housing gains
By Bridget Carter From: The Australian August 24, 2010 3:22AM

PROPERTY investors are targeting off-the-plan apartments hoping for short-term capital gain, with thousands of prospective pre-sale buyers eyeing Sydney projects.

Ray White is reporting a 6 per cent lift in investor buying as shares weaken and with the end last year of the boosted first-home buyer's grant, The Australian reported.

But analyst Michael Matusik predicts investment properties will flood the market in the near term, leading prices to soften.

An Australian Housing and Urban Research Institute report this month said 80 per cent of investors buy for long-term gain, but at least half sell within five years because of cashflow problems or disappointing capital growth. One in four investors sells within 12 months.

Developers in Sydney are reporting strong demand for new residential projects following stamp duty concession by the NSW government this year.


Tim Casey of St Hilliers Group says his company has had 650 people interested in apartments at the Caritas site in inner Sydney's Forbes Street, for which marketing begins this week.

And Harry Triguboff's Meriton Apartments reports strong interest for proposed apartments at the former Seven Network site at Epping, with more than 300 applications.

Mr Matusik said property prices would not crash, but there would be deflation in values over time.

"In the next decade, we might see very little growth, and if investors keep buying and thinking 'I'm going to make a killing and then move on', they're going to find themselves a little disappointed," he said.

This would be mostly the case in Melbourne, where the market had been strong, he said. In Perth, Brisbane and Adelaide, the trend had already started to occur.