First Home Buyers stop renting and start owning

May 01, 2017
Kathryn Coleman

Nearly half of all Australian first home buyers see rent as “dead money” and are keen to buy their own home.

According to Mortgage Choice and Core Data’s Evolving Great Australian Dream report, for 48.8% of first home buyers, not paying rent was the key motivator for getting onto the property ladder.

Renting can be a cheaper alternative or allow you to live in an area you might not necessarily afford to buy in.  However, the money you put towards rent is paying someone else’s mortgage, rather than a tangible asset that you own.

As a general example, if a borrower was to buy a median-priced house in Brisbane for $635,000* and borrow 80% of the property price, their monthly repayments on a 30-year, P&I home loan with an interest rate of 3.79% p.a., would roughly be $2,365.

Meanwhile, data from Residential Tenancies Authority shows the median rental price for a house in Brisbane is $420 a week, or approximately $1,820 a month.

So, in this example, for an extra $550 a month, a borrower could own a property and be using their income to build a portfolio of assets.

There is no right or wrong decision when it comes to buying and owning property versus renting. It all comes down to your personal circumstances, where you work, where you prefer to live and what you feel comfortable with.

According to the research from the report some of the other reasons why first home buyers chose to buy property included: being able to afford it (30.9%), reaching a certain age (28.5%), having children (18.7%), and finding the right place (18.7%).

Property is a long-term investment that will grow your asset base and help future-proof your wealth. Some borrowers (particularly first home buyers) may not be able to buy in their desired area or the style of property they really need.  Most home owners find  once they own property it can be easier to grow wealth and upgrade into a better home down the track.

Purchasing an investment property before an owner occupied dwelling is another way to enter the property market.  This gives first home buyers the opportunity to purchase property in an affordable area, while still choosing to live in their desired location.

This type of property investment is commonly referred to as ‘rent-vesting’ and it’s a great option for home buyers wanting to enjoy the benefits of home ownership, while living where they prefer.

Whether you choose to rent, buy an investment property or a home to live in, you have to ensure you are making the right financial decision for your needs – both now and into the future.

It’s important to always seek the advice and expertise of a qualified professional before you making major property purchasing decisions.  George Cremona your local mortgage broker is available to discuss any home buying questions you may have and will guide you through step by step.


*Sep 2016, REIQ Median House Price up in Brisbane in a quarter of surprises


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Tags: Buy First HomeFirst Home BuyerHome LoansBuying PropertyRenting

Posted in: First home buyers

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