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New data from Mortgage Choice has confirmed the perception that first home buyers are increasingly choosing to buy an investment property rather than a dwelling to occupy, with the number soaring over the past year.
The group’s latest Investor Survey revealed 36.6 per cent of investors were first-time buyers, up 15.5 percentage points from the 21.1 per cent level recorded this time last year.
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Mortgage Choice chief executive John Flavell said the results reflect the impact of property price rises across Australia’s capital cities.
“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,” he said.
“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.
“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.”
According to the data, one in four first time buyers believe that purchasing an investment property is a much more affordable option than an owner-occupied property.
That being said, Mr Flavell noted that he wouldn’t be surprised to see a slight reduction in the number of first-time buyers purchasing investment properties over the next year.
“As a result of APRA’s decision to cap investment lending growth at 10 per cent 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.
“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.”
[Related: Housing finance falls to 21-month low]
