New buyers put investments before home

By Staff Reporter

New buyers looking to dive into home ownership may want to reconsider, and perhaps pick up an investment instead, according to a leading home loan expert group.

Where, traditionally, those looking to get into the property market would buy a home first and then consider investing, many are turning this on its head, said Belinda Williamson, head of corporate affairs at Mortgage Choice.

“The old expectation of first time buyers purchasing a home before an investment property is not necessarily the case in today’s market,” explained Ms Williamson.

With the relatively high prices in many desirable home ownership areas, affordability may limit future investment opportunities as well as the ‘dream home’. For this reason, she said, many of these would-be home buyers are becoming investors.

“While affordability has improved of late, it is not uncommon for first time property buyers to dip their toe into the market by purchasing an investment property first.

“They then rent the property out and use the life lessons, possible tax benefits and any financial gains to put them in a better position to buy their first home,” she said.

This is especially the case with younger buyers, particularly those priced out of their chosen areas. With current first home owner grants only applicable on new builds, this is becoming an even more attractive aspect for those looking at established dwellings.

“A clever investment property purchase and a little patience could see these homebuyers-to-be residing in their desired suburb sooner than expected.”

However, for this to be fruitful investors must ensure they do their research and understand that it isn’t the same process as buying a home.

“If you are considering buying an investment property, you want to make sure you have thoroughly investigated the property’s potential rental yield, tenancy demand and capital growth, as well as your finance options and your rights and responsibilities as a landlord.

“First time buyers also need to be mindful that buying an investment property is often different to buying a home. When people purchase the home of their dreams they look for practical aspects that will make them feel comfortable living in the house.

"However, when purchasing an investment property, buyers are looking at whether the investment will produce a positive return and will be relatively easy to manage,” she said.

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