Many first-time buyers are choosing to invest

New research has revealed that one third of first home buyers are choosing to buy an investment property as their first property purchase.

According to the 2018 Property Investment Professionals of Australia (PIPA) Investor Sentiment Survey, 36 per cent of first home buyers are choosing to “rentvest” (buy an investment property while continuing to rent) rather than buying a home to move into.

PIPA chairman Peter Koulizos noted that the popularity of rentvesting looks to be here to stay as demonstrated by the 63 per cent of survey respondents who said they would consider rentvesting as an investment strategy.

“What this insight shows us is that first-time property buyers generally have probably been more active over recent years than official statistics originally recorded,” he said.

“The Australian Bureau of Statistics (ABS) publicly admitted issues with first home buyer statistics from 2012 to 2016, in part due to some lenders only reporting loans to first home buyers who received a First Home Owner Grant.

“Of course, most grants were restricted to first-timers buying a new property as their home, not as an investment many years ago.”

ABS statistics show that about 18 per cent of properties financed in September were to first home buyers.

There have been revisions to official data so first time investors should now be accounted for in the first time buyer group, however the ABS has noted that issues may still persist.

“There’s no doubt that the softer market conditions are making it easier for first-time buyers when it comes to purchase prices, however, lending restrictions are conversely making it more difficult for them to secure finance,” Mr Koulizos said.

“On top of this, it appears that recent political assertions that first-time buyers are only one in seven purchases – or 14 per cent – is factually incorrect.

“It seems that the dream of property ownership has remained alive and well for some time, with many first-timers opting to improve their financial futures by investing in more affordable locations while renting elsewhere.”

Another interesting result from the survey was that the vast majority of first-time buyers had chosen to buy an existing property, as opposed to a new property that would allow them to receive government grants.

“About 83 per cent of first-timers purchased existing property with only 14 per cent buying new or off-the-plan,” Mr Koulizos noted.

“This is partly due to affordability considerations with established properties generally available for lower prices points than new, plus the majority of all investors always prefer existing properties.”

To read the full report visit http://www.pipa.asn.au/images/PIPA-SPI-Sentiment-Survey/2018_PIPA_Investor_Sentiment_Survey_Report.pdf.

 

Source: https://www.therealestateconversation.com.au

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