According to Mortgage Choice, a growing number of first home buyers are choosing to purchase an investment property before they purchase an owner occupied dwelling. This is consistent with DFA’s previously reported analysis.
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.
Mortgage Choice chief executive officer John Flavell 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 Flavell’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 Flavell 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 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.”
