Property Investment Professionals of Australia (PIPA) chair Ben Kingsley says one and two bedroom units are facing headwinds from potential tenant shortages and large amounts of supply coming onto the market in the next 18 to 24 months.

He says houses, townhouses and villas in Brisbane, Adelaide, Canberra and Hobart, and some properties in Melbourne, offer much better potential returns on investment.

"I'd be avoiding apartments in medium and high-rise complexes in pretty much most of those areas," Mr Kingsley said.

PIPA's 2016 Investor Sentiment Survey shows respondents are getting a bit wiser about unit versus house markets.

The proportion of respondents looking to buy apartments has fallen to 10 per cent this year, from 15 per cent in 2015.

However, more than 68 per cent of respondents looking to purchase in the next six to 12 months were planning to buy houses, townhouses or villas.

Mr Kingsley said Brisbane is the most popular capital city market, despite its underperformance, due to its relative affordability.

However, he again cautioned against investing in apartments because Brisbane wasn't yet a higher density area and residents were not used to living in units.

"They (Brisbane apartment investors) are up for some risks - in terms of properties not valuing at purchase price if they're bought off the plan and potentially significant fire sales on rent to attract tenants so they can get some income in from that," Mr Kinsgley said.

"Not every property is a winner, it's just like not every share is a winner."

The PIPA survey, which covers responses from 1004 property investors, also showed only 13 per cent of respondents listed record low interest rates as their key reason for investing, while a mere two per cent cited negative gearing concessions as motivation.

"Most investors are playing the long game, 47 per cent of them are actually deriving an income from their portfolio," Mr Kingsley said.

"This whole argument is around negative gearing being a strategy; it's not a strategy, it's just a moment in time."

  • Everyone is looking for an easy investment that has good returns and lets them free to play golf without day to day watch what their money is doing. Buying shares or an apartment is going into partnership with a whole bunch of people who surrender their wealth and hope the Gods look after them. The only people who keep and create further wealth are the ones watching their wealth, like a Shepherd who is looking after his own sheep.
    The people who have made great gains in their wealth has been because others have surrendered their wealth.

  • This was inevitable – Australians do not want to lived in cramped units situated smack bang in the middle of CBD's. Australians have a different attitude towards cities – CBD's are for work and business, the suburbs are where you're supposed to live.

  • If you have the money, the real best investments are those in the inner and middle suburbs.The nature of the services based economy dictates that there will be a gravitational pull inward toward the cities rather than outward. Whilst the inner city apartments do not provide for family friendly living which is what will continue to be in demand, that is not true of the inner and middle suburbs, which will continue to provide options for family friendly living within close proximity to transport links and employment opportunities. Better yet (for investors), since local councils are extremely reluctant to allow new development in these areas for fear of agitating existing residents.