Landlords view capital growth as more important than rental returns when investing in property, according to research undertaken by LJ Hooker.
More than one in four (27%) landlords said capital growth was their main motivation for investing in property, while only 15% nominated rental income.
Finding a balance between price growth and yield was, however, the perfect outcome, according to 58% of respondents.
LJ Hooker National Research Manager Mathew Tiller said the findings to the real estate group’s 2015 Investor/Tenant Survey underlined the long-term vision investors took to property.
“Securing a regular income stream via rental returns is not the primary reason investors seek out property,’’ said Mr Tiller. “The findings indicate capital growth and rental returns in combination are overwhelmingly desired, but a weekly income stream on its own is not a discernible motivator.”
The significance of capital growth also correlated with how investors use property to build their personal wealth as they get older. Respondents aged 35-44 owned on average more than two properties, while landlords aged 55-64 owned on average three.
“But once the landlord sample reached the age of 65, there was a sharp declined in property ownership as landlords divested some of their portfolio to fund retirement,’’ said Mr Tiller.
“Property investment is most successful when a long-term vision that transcends property cycles is embraced.”
Survey findings also uncovered the importance of negative gearing for property investors.
According to the findings, 55% of respondents thought negative gearing was either ‘very important’ or ‘important’ in their investment strategies, while only 16% said it was ‘not important’.
Indeed, when respondents were asked what they would do if negative gearing was abolished, 31% said they would sell some or all of their properties.
“The negative gearing debate receives significant debate because of the perceived impost on the tax base,’’ said Mr Tiller. “But it’s evident to see how important it is for investors. It is also important for the economy, encouraging investors to inject money into the economy, driving jobs and supporting local communities.”
The survey also found that property investment was not restricted to the wealthy.
LJ Hooker Head of Property Management, Amy Sanderson, said owning an investment property was far more achievable than many thought, with 29% of respondents earning an annual household income of between $100,000 and $150,000.
“Across Australia and New Zealand, LJ Hooker manages more than 150,000 residential properties for landlords, which underlines the importance and accessibility of real estate as an investment option for the community,’’ said Ms Sanderson.