September 05, 2013
Houses are king for first-time property investors
Survey reveals home truths about Australians’ property investment strategies
Small houses trump apartments when it comes to investment property preferences, according to the findings of the Mortgage Choice 2013 First Time Property Investors Survey* (the Survey).
When comparing the type of property preferences of first time investors looking to purchase in the next two years, small houses with one to three bedrooms came in as the clear favourite, at almost half (46%) of all respondents. Interestingly, there was a significant gap between the top preference and remaining choices, with small apartments with one to two bedrooms ranked second at 21%, and rounding out the top three was large houses with four or more bedrooms, at 16%.
Local Mortgage Choice franchise owner, Des Nation said, “It is not surprising investment strategies are as diverse and individual as the investors themselves. Nonetheless, there are definite similarities when it comes to choices and preferences around property investment.”
“Houses are king for first time property investors, with a small house topping the list in all states as the preferred investment property-type. South Australia was the clear leader with 56% of this state’s respondents looking to invest in a small house while New South Wales was at the other end of the scale with 39% of respondents planning to do so.”
Top five factors to look for in a property
Regardless of the property type, the top five factors that influenced respondents’ choice for an investment property were:
· In the right suburb and street (62%);
· Tenant demand in that area (61%);
· Locality to amenities and entertainment (55%);
· Population growth in that area (47%); and
· If the property needs any repairs, renovations or regular maintenance (45%).
“It is clear from our survey results that property investors who do their homework understand the kinds of factors to take into account in order for their property investment to pay off,” Des explained.
Investors can gain from professional home loan help
Des went on to say that getting guidance from a professional mortgage broker can help to ensure that your investment strategy is successful. A mortgage broker can assist with making certain that the size of your mortgage, repayment strategy, loan type and finance structuring are suited to your investment goals.
“According to our survey, almost one third – 31% – of Australia’s first-time property investors are looking to use a mortgage broker to purchase their property. This shows that many up-and-coming investors are switched on to the idea of a professional doing the leg work to find them a suitable loan, which can save them time, hassle and possibly money,” said Des.
Funding the property purchase
When it comes to funding the investment property, Des said that the majority (34%) of first time investors were planning to borrow the full purchase price using the equity in their current home as security.
The second most common funding option, as indicated by 26% of respondents, was to use the equity in their current home to fund only part of the purchase price and to top this up with funds from elsewhere. Rounding out the top three responses, 25% of respondents said they would use a combination of savings and a mortgage.
“With interest rates at historically low levels and many economists predicting further cuts, borrowing to invest in property has never been more affordable,” Des said.
Four in every five (80%) first-time investors intend to build an investment property portfolio. Of those who are looking to create a portfolio:
· 64% plan to buy up to three properties;
· 11% plan to buy four or five properties;
· 5% plan to buy between six and 10 properties;
· 2% plan to buy between 11 and 50 properties; and
· 18% plan to buy as many properties as possible.
Des concluded by saying, “The results of the Survey showed that Australians’ love of bricks and mortar as an investment strategy is showing no signs of abating. If such a preference is to continue, it may be a good sign for the future health of the property market.”
If you want to learn more about your home or investment loan options, call (02) 9833 8177, visit 1/211 Queen Street, St Marys or log onto www.mortgagechoice.com.au/des.nation
*About the Survey
Market research company Nine Rewards was commissioned by Mortgage Choice to conduct the 2013 First Time Property Investors Survey. The online Survey was conducted in late July 2013 and completed by 1,019 Australians who were purchasing their first investment property in the next two years. For the purposes of this survey, Gen Y is born between 1980 to 1994, Gen X between 1965 and 1979, Baby Boomers between 1946 to 1964 and Builders between 1925 to 1945. Note, the figures in the media release commentary have been rounded to the nearest whole percentage point.
This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the information, consider its appropriateness to your circumstances.
About Mortgage Choice
Mortgage Choice has sourced a home loan for well over 350,000 people since 1992. It works with all manner of property finance borrowers via hundreds of franchises.
The company writes one in every 25 home loans in Australia by providing professional guidance on, and choice of, products offered by an extensive panel of leading lenders. Many of its brokers provide a broader service, helping customers source commercial and personal loans, asset finance, deposit bonds and providing referrals for risk and general insurances.
Uniquely, Mortgage Choice pays its franchisees the same commission rate for home loans they write, regardless of rate paid by the lender a new customer selects, working in the customer’s best interests to tailor a solution to them.
To cater to the growing needs of our customers, Mortgage Choice soft-launched in October 2012 its new financial planning business. Mortgage Choice Financial Planning will officially launch in FY14.
The company has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).
Mortgage Choice holds an Australian Credit Licence: no. 382869, issued by ASIC and Mortgage Choice Financial Planning Pty Limited, a fully owned subsidiary of Mortgage Choice, holds an Australian Financial Services License: no. 422854, issued by ASIC.