FHBs flocking to investment properties

Mortgage Choice data shows jump in FHB investment demand 

New data has revealed a growing number of first home buyers are choosing to purchase an investment property before they purchase an owner occupied dwelling. 

According to Mortgage Choice’s latest Investor Survey, 36.6% of investors were first time buyers – significantly higher than the 21.1% recorded this time last year. 

Local Mortgage Choice South Perth’s Nathan Bottrell said the results weren’t surprising given that property prices continue to rise substantially across Australia’s capital cities where “most people want to live”. 

“Australians increasingly want to live close to work and where the action is, which is why most people like to live as close to the capital city centres as possible. Of course, with prices rising across most capital cities, purchasing property near or close to the city is becoming increasingly difficult for buyers – especially first home buyers,” he said. 

“As such, we are seeing an increasing number of first time buyers purchasing investment properties before an owner occupied property as this allows them to buy where they can afford and still live where they want to.” 

Mr Bottrell’s comments were echoed by the data, with one in every four first time buyers admitting that they had purchased an investment property before an owner occupied property because it was more affordable. 

When asked why they had purchased an investment property first, 26.6% of respondents said they could more “easily afford it”, while 26.5% said it allowed them to “get their foot onto the property ladder”, and 18.9% said it allowed them to “buy where they could afford and still live where they want”.  

But while there are plenty of good reasons why first time buyers choose to purchase an investment property before an owner occupied dwelling, Mr Bottrell said he wouldn’t be surprised to see a slight reduction in the number of first time buyers purchasing investment properties next year. 

“As a result of APRA’s decision to cap investment lending growth at 10% for all lenders, many of Australia’s banks have started to make some sweeping changes to their investment lending policies,” he said. 

“Moving forward, I think we can expect these changes to reduce the current level of investment lending. Unfortunately, it won’t be the middle-aged, middle-class or foreign investors who are locked out of the market, it will be first home buyers - those struggling to get a start. And I can see the gap between the ‘property haves’ and the ‘property have-nots’ widening as a result – especially if property values in markets like Sydney and Melbourne continue to grow.” 

If you would like learn more about your home loan or financial advice options, call us on 08 9472 0211

 

Table 1: Property preferences

Will this be your first property purchase?

National

NSW

VIC

QLD

SA

WA

No, I own my own home

39.3%

33.4%

38.0%

39.5%

43.5%

42.1%

No, I have owned more than one home before

20.4%

15.4%

17.8%

22.9%

21.0%

25.1%

No, I already have an investment property/ies

3.7%

4.4%

5.7%

2.0%

5.5%

1.0%

Yes

36.6%

46.8%

38.5%

35.6%

30.0%

31.8%

 

Table 2: Investment decisions

Why did you purchase an investment property before an owner occupied property

National

NSW

VIC

QLD

SA

WA

It allowed me to get my foot on the property ladder

26.5%

25.9%

28.5%

21.6%

34.4%

22.3%

I could more easily afford an investment property

26.6%

27.6%

29.5%

28.9%

22.2%

24.6%

I am looking out for my financial future

18.8%

16.6%

10.8%

27.4%

22.9%

16.1%

I could buy where I can afford and still live where I want

18.9%

20.0%

24.1%

16.3%

13.8%

20.1%

I wanted to take advantage of the low rate environment

8.8%

9.9%

7.1%

3.9%

6.6%

16.7%

Other

0.4%

0.0%

0.0%

1.9%

0.1%

0.2%

 

Posted in: Property investment

Contact us today.


Additional Comments? * :