Houses are king for first-time property investors

February 10, 2014
Sandra Heinzlmeier

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%.

'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.'

Funding the property purchase

When it comes to funding the investment property, 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.'

*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. 

Posted in: Property investment

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