Investor fears levels are at 40-month lows as property investors anticipate increasing returns over the next 12 months – a feeling the market hasn’t had for some time.

An investment trends report said falls in investor fear throughout 2012 had not been translating into higher return expectations and the intention to invest – until now.

The report, the Investor Intentions Index, is a monthly report that takes the pulse of Australian investors’ sentiment and investment intentions, and is based on the responses of over 800 investors each month.

Investment Trends senior analyst Recep Peker said improved confidence would see positives for property.

“The proportion [of investors] who feel now is a good time to borrow to invest is the highest it’s been since we started a year and a half ago (41%),” he said.

Peker added that up until the end of 2012 the overall decline in fear levels had not translated to an increase in investors’ return expectations, but that now, for the first time, there was a spike in the returns that investors anticipated.

Meanwhile, Roy Morgan Research has found that business confidence increased last month to its highest level since April 2011.

The report attributed the increase to more businesses expecting Australian economic conditions to improve over the next year.

Norman Morris, industry communications director at Roy Morgan Research, warned, however, that it was too early to tell if improving confidence will be an on-going trend.

 “Despite the current positive outlook, it remains to be seen whether this trend can be sustained as the market is likely to react very quickly to any negative news either overseas or during the current reporting season.”