Some 54% of property investors are concerned about a potential property market crash, but only 22% select it as their primary concern, new research by Australian fintech startup TaxTank has shown.
The study also found that property market crash concerns are higher among younger investors, indicating that those who have been in the property market longer were potentially seeing the changes as part of the ebb and flow of investing – or even as an opportunity.
With property values declining for the first time since 2020 amidst high inflation and rising interest rates, TaxTank founder Nicole Kelly said she’s seeing more property investors wavering between buying and selling.
“Some clients see this market change as a potential buying opportunity and are watching property prices closely for a decline,” Kelly said. “It’s a real balance between managing the investment properties they have and taking the opportunity to expand their portfolios. At the moment, many are sitting on the fence waiting for the market to drop, and to see how the next few months play out.”
The study also found that only 34% of property investors know their cash position well and only 21% know their tax position well, while 20% know little about their current equity position.
Kelly highlighted the importance of knowing the overall equity of investments and understanding cash and tax position in managing an investment portfolio as well as in making decisions about buying and selling.
“From our study, we know solid rental returns are a major consideration in the decision-making process when buying, and rental demand is not likely to slow anytime soon,” she said. “Likewise, understanding the difference between the cash and tax position, which is amplified by rental returns and depreciation, is imperative when comparing property performance. This is particularly important when considering which properties to sell. Knowing the available equity in each property and your portfolio as a whole ensures you never miss an opportunity. Couple this with growth forecasts based on 10-year monthly average, and you have a powerful decision-making tool. Whether it’s to reduce tax or set yourself up for retirement, understanding why you’re buying and holding investment property is paramount; so too is monitoring the performance of each property to ensure they are working hard for you.”
Kelly added that reducing tax requires negatively geared property, which is why it is crucial to know investors’ tax position and how to maximise soft-dollar expenses like depreciation.
“However, knowing how much cash you need to support each property is just as important, especially if you’re planning to expand your portfolio and beef up your borrowing power,” she said.
