First Home Buyers face a dilemma

November 11, 2014
Stuart Pullar

Majority of FHBs can’t afford to buy in desired area

New data reveals first time buyer purchasing plans

 

A majority of first homebuyers believe they won’t be able to afford exactly where they want to buy, new research has revealed.

 

According to Mortgage Choice’s 2014 First Home Buyer Survey, which canvassed the opinions of more than 1,000 future first time buyers who plan to purchase a property within the next two years, 54.3 per cent of respondents said they will not be able to buy where they want to.

 

Of those who indicated they would not be able to buy where they wanted to, 88.8 per cent said it was because “the area is out of their price range”.

 

Speaking about the findings, local Mortgage Choice Franchise owner Stuart Pullar said while the majority of first time buyers had indicated that they may not be able to buy in their dream suburb, they are still committed to the idea of putting a foot on the property ladder.

 

“When the survey asked the first time buyers why they were looking to purchase property within the next two years, 53.3 per cent said it was because they wanted to ‘set themselves up financially for the future’,” he said. 

 

“This reaction indicates that first time buyers see benefits in buying property and as such, are keen to get themselves on to the property ladder sooner rather than later.

 

“In fact, it is not uncommon to see first time buyers purchase an investment property before an owner occupied property.

 

“Purchasing an investment property first allows first time buyers to purchase where they can afford and still live where they want to.”

 

According to Mortgage Choice’s Investor survey released earlier this year, more than 20 per cent of investors said they purchased an investment property before an owner occupied property.

 

“At Mortgage Choice, we are seeing an increasing number of first time buyers purchasing investment properties before owner occupied properties,” Mr Pullar said.

 

For those who are thinking of purchasing an investment property before an owner-occupied property, Mortgage Choice offers the following tips:

 

Choose wisely: When investing in real estate, it is important to buy the right property at the right price. The ideal investment property is one that will not only increase in value over time, but one that is attractive to potential tenants.

 

Do your sums: When investing in property, it is important to look at it as a long term investment, so make sure you can afford your mortgage repayments over the longer term. A finance professional can help you to structure your investment so that it suits your needs and circumstances both now and into the future.

 

Understand the market dynamics: Having a good understanding of the property market as well as its ebbs and flows will help you to choose the best investment property for your needs and future financial goals.

 

If you would like learn more about your home loan or financial advice options, call 07 34630500, or visit www.mortgagechoice.com.au/stuart.pullar.

 

Table 1a: Purchase plans

 

Will you be able to buy exactly where you want to?

National

NSW

VIC

QLD

SA

WA

Yes

45.7%

41.7%

46.9%

48.0%

47.1%

42.5%

No

54.3%

58.3%

53.1%

52.0%

52.9%

57.5%

 

Table 1b: Purchase plans

 

Why won’t you be able to buy where you want to?

National

NSW

VIC

QLD

SA

WA

There are no properties that I like for sale in that area

6.1%

4.9%

6.6%

6.2%

8.3%

4.3%

The area is out of my price range

88.8%

91.2%

92.1%

89.2%

77.8%

87.0%

None of the properties for sale in the area meet my requirements

2.7%

1.0%

1.3%

4.6%

5.6%

4.3%

Other

2.4%

2.9%

0.0%

0.0%

8.3%

4.3%

 

Table 3: Purchasing decisions

 

What is the key motivator/s behind you looking to buy your first property? 

National

NSW

VIC

QLD

SA

WA

To set myself up financially for the future

53.3%

45.1%

59.4%

52.8%

55.9%

61.3%

I want a family home to raise my children in

45.6%

47.4%

36.4%

52.8%

47.1%

47.5%

Rising rents is making ownership more attractive

33.1%

29.7%

32.9%

39.2%

27.9%

35.0%

Favourable market conditions (low interest rates etc)

19.6%

16.0%

21.0%

24.0%

22.1%

17.5%

I see more benefits in investments such as property than I do in the share market

19.1%

17.1%

24.5%

20.0%

19.1%

15.0%

I want to purchase before the FHB grants expire

15.0%

11.4%

18.2%

16.0%

10.3%

21.3%

Capital gains

13.3%

18.3%

18.9%

8.8%

5.9%

7.5%

Advice received from family, friends or a financial planner

11.3%

6.9%

11.2%

12.0%

20.6%

13.8%

I have researched the property market and found property investment will enable me to achieve my financial goals sooner

11.2%

11.4%

14.0%

10.4%

5.9%

11.3%

Pressure from my family/partner

11.2%

12.0%

11.9%

8.0%

10.3%

12.5%

Positive gearing opportunities in the future

10.7%

10.3%

14.0%

7.2%

13.2%

11.3%

Rental yields, because I plan to keep my first home as an investment property

10.5%

8.6%

11.9%

10.4%

7.4%

15.0%

Building a portfolio

9.4%

8.6%

13.3%

6.4%

10.3%

7.5%

My parents’ success with property investment

7.6%

8.0%

7.7%

4.0%

11.8%

7.5%

Negative gearing opportunities in the future

7.1%

7.4%

9.1%

7.2%

5.9%

3.8%

I’m not ready to own my own home, but I want to get a start

6.4%

8.6%

3.5%

5.6%

10.3%

5.0%

Reading and/or hearing of other people’s successes

6.1%

5.7%

5.6%

5.6%

2.9%

10.0%

Other

3.0%

2.9%

0.7%

4.8%

5.9%

2.5%

 

 

*About the survey

Market research company Nine Rewards was commissioned by Mortgage Choice to conduct the 2014 First Home Buyer Survey. The online survey was conducted in late August 2014 and completed by 1,114 Australians who were looking to purchase their first home in the next two years or who bought their first home in the last two years.  

 

For further information, photos of the new logo, or to arrange an interview, please contact:

Stuart Pullar

Mortgage Choice Ashgrove and Stafford Heights

07 3463 0500

Stuart.pullar@mortgagechoice.com.au

 

 

Important information

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 advice, consider its appropriateness to your circumstances.

 


About Mortgage Choice

Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs.

Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.

Since that time, the company has grown and developed into a fully fledged financial services provider.

Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance.

Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers.

Mortgage Choice 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 and Mortgage Choice Financial Planning Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.

Recent recognition: 2014 Australian Broking Awards Best Diversification Program; 2013, 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social Responsibility Program; 2012 Australian Broking Awards Best Training and Education;   No.1 on The Adviser magazine’s 2012, 2011, 2010 and 2009 Top 25 Brokerages list; 2012, 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list.

Visit www.mortgagechoice.com.au or call customer service on 13 77 62.

 

 

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