1 in 2 new investors jump into market ‘without a road map’, report says

The survey, based on the responses of 780 investors across the country, also showed that one in three (33 per cent) of beginner investors or those with two properties in their portfolio have no clear blueprint to follow. 

Managing director of Momentum Wealth, Damian Collins, said the lack of strategy among beginner investors is concerning, as this could lead to them missing out on potential opportunities.

He emphasised that planning is “especially crucial” for first-time investors: “[It] ensures an informed purchase decision at the start of the property journey, and provides a solid launch-pad for further investments in the future.”

The expert’s call for a solid plan of action also comes at a time when market growth is significantly slowing down due to shifting market sentiment, rising rates and other factors. 

Interestingly, the market slowdown is not deterring investors from entering the market as the survey showed property remains a popular investment choice among Aussies. 

The report also highlighted that around one in four property investors is targeting entry into the market within the next 12 months, with Western Australia named as one of the top investment destinations.  

Figures from the Australian Bureau of Statistics (ABS) showed that Western Australia reported continuous growth in investment housing finance since the start of 2022. 

As a further indication that the West Australian market is a hot spot for investors, data also showed that new investment housing finance in Western Australia for May 2022 totalled $0.74 billion, up from $0.48 billion in May 2021. 

“In the current Perth property market, we are seeing considerable interest among investors, particularly those based in the eastern states, who are attracted to the value and growth potential of the Perth market,” Mr Collins said.

In July, CoreLogic data showed that Perth is among the only three capital cities that recorded a monthly growth in dwelling price, with the median cost of a dwelling in the city rising 0.2 per cent to $560,020. On an annual basis, dwelling prices in Perth rose by 5.5 per cent. 

But Mr Collins emphasised that property selection “should not just be price-driven” and called on new investors to do their due diligence and chart their long-term course before entering any market. 

“Different properties and locations will each deliver differing results in terms of cash flow versus capital growth. This makes it critical for investors to understand what they are aiming for in a property investment, and plan accordingly,” he stated. 

Seasoned investors have a plan 

The report showed that 80 per cent of investors with at least two properties and 86 per cent of those with over five assets follow a plan — indicating that the majority of seasoned investors view planning as a must. 

Mr Collins said the high proportion of investors who took time to draft and put a plan in place is indicative of the value of having a blueprint as part of a long-term investment strategy.

But aside from being armed with a plan, Mr Collins also advised investors to regularly go back to the drawing board on an as-needed basis. 

“Of course, our financial situations are constantly evolving, and a plan made today needs to be regularly reviewed and fine-tuned to reflect changing preferences around risk and shifting personal needs while identifying further opportunities to advance wealth,” he said.

“I encourage all property investors to develop a personal roadmap to be confident they are investing in a suitable property to achieve their goals — this is an area where the advice of property experts can prove incredibly valuable,” Mr Collins concluded.