Young people buying investments before homes

By Stefanie Garber 29 November 2013 | 1 minute read

Young people are increasingly buying their first property as an investment rather than a home, the CEO of a non-bank lender has said.

“More and more people are just starting to come out and buy their first property as an investment property,” CEO of State Custodians Heidi Armstrong said.

In her experience, these novice investors fall into two different groups.

“There are some who want to buy a brand new apartment or something like that, so they’re thinking about taking advantage of first home buyer grants,” she said.

“They’re going in as a first home buyers and then later converting it to an investment property six months later.”

She says this strategy can have advantages from a lender's perspective.

Many lenders will allow first home buyers to buy with a five per cent deposit, whereas they require 10 per cent from first-time investors with no equity, she said.

Nonetheless, some young investors fall into Ms Armstrong's second group, who choose to buy their first investment while renting elsewhere or living with family.

“I think one big factor in it is that people can then choose the location in which they want to live,” she said.

In some cases she has seen, these young investors are completing multiple purchases while still living with mum and dad.

Young people buying investments before homes
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