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How COVID has shifted investor mindset in the property hunt

By George Hadgelias

Historically, investor demand for housing has been very much focused on inner-city areas of major capital cities and popular holiday destinations, such as Queensland’s Gold Coast and Sunshine Coast.

But the repercussions of COVID-19 and closed international borders have forced some dramatic shifts in the locations that investors are interested in.

Monthly email enquiries from buyers who identify themselves as investors on realestate.com.au have revealed some dramatic changes in the locations of interest between January 2020 and January 2021.

Coastal suburbs such as Surfers Paradise, Mooloolaba, Maroochydore, Port Macquarie and Noosa Heads remained popular over the year and saw increased enquiry, while investor interest in inner-city markets waned. 

In January 2021, Melbourne had the fourth-highest number of investor enquiries nationally, however the number of enquiries dropped 38% over the year.

By comparison, Surfers Paradise kept its number one ranking in 2021, with enquiry volumes up 28%. Mooloolaba (+56%), Maroochydore (+58%), Port Macquarie (+91%) and Noosa Heads (+82%) also saw jumps in enquiry. 

Of the top 10 suburbs for investor enquiry in January 2020, all of them except for Melbourne (-38%), Brisbane City (-47%), Southport (-6%) and Noosaville (-44%) recorded an increase in enquiry in January 2021.

Expanding the data to broader regions shows some big changes in investor interest over the past 12 months. 

Looking at the top 10 regions for investor enquiry in January 2020, three (Brisbane Inner City, Sydney-City and Inner South, and Sydney-North Sydney and Hornsby) fell out of the top 10 ranking in January 2021. Three regional areas moved up the ranks: Hunter Valley excluding Newcastle, Southern Highlands and Shoalhaven, and Latrobe-Gippsland. 

While Melbourne-Inner kept its top 10 ranking, investor enquiries slipped 29% over the year. 

In January 2021, there were 14 regions nationally that saw investor enquiry more than double compared to the previous year, and all 14 of them were in non-capital city locations.

Investor enquiry in Southern Highlands and Shoalhaven (+244%) and Barossa-Yorke-Mid North (+202%) more than trebled over the year.  

Has investor mindset changed for good?

At least for the time being, investor preferences are changing. While typically investors have favoured coastal markets with larger populations and higher-density capital city areas, these capital city areas are losing their popularity and regional areas are increasingly being preferenced.

Assuming a COVID-19 vaccine is rolled out successfully in 2021 and things begin to return to normal, it’s likely we will see some further changes in investor demand in 12 months’ time.

Demand is likely to remain strong in regional areas, however this will probably be focused on areas closer to capital cities.

The popularity of inner-city areas is unlikely to return until such time as overseas migration returns, but a further upswing in investor interest in outer capital city markets could be expected. 

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