First timers opt to invest

Many first home buyers are opting to buy an investment property because they can’t afford where they want to live, new research has revealed.

Mortgage Choice’s 2014 First Home Buyer Survey* found that 54.3 per cent of respondents think they will not be able to buy where they want.

Of those, 88.8 per cent said it was because “the area is out of their price range”.

Announcing the findings, Mortgage Choice spokesperson Jessica Darnbrough said while the majority of first time buyers had indicated that they might 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’,” she 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 as it allows them to buy where they can afford and 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.

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: 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 you.

* the survey canvassed the opinions of more than 1,000 future first time buyers who plan to purchase a property within the next two years