First Time Property Investor Insights

August 27, 2013
Teresa Samuels

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.  

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.  

Investors can gain from professional home loan help

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.  

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.  

Investment plans

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.  

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.

Posted in: Home loans

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