The number of first home buyers turning to investing is on the rise as they’re priced out of buying properties they want to live in.
A recent investor survey by Mortgage Choice revealed 36.6 per cent of investors were first-time buyers – significantly higher than the 21.1 per cent recorded this time last year.
Mortgage Choice chief executive John Flavell said the results weren’t surprising given that property prices continue to rise across Australia’s capital cities where “most people want to live”.
“Australians increasingly want to live close to work and where the action is, [but] 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,” Mr Flavell said.
“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.”
A quarter of first-time buyers admitted in the survey that they had purchased an investment property before an owner-occupied property because it was more affordable.
New calculations by comparison site Mozo have revealed that first home buyers across Australia are facing a decade of consistent saving to scrape together the average property deposit.
The typical first home buyer on the average wage will have to save 15 per cent of their after-tax salary every month for more than a decade to save a 20 per cent deposit for average-priced property nationwide.
Mozo director Kirsty Lamont said the average Australian needs to save $735 every month for 10 years and 8 months to save an average 20 per cent deposit of $113,000.
“First home buyers are having to face the huge hurdle of bridging the ‘deposit gap’ to buy a property which could take anywhere between six and 14 years, depending on the city,” Ms Lamont said.
“These figures are based on an average dwelling in each city, so saving for the Aussie dream of a quarter-acre block would take even longer.”
The results have been calculated based on saving 15 per cent of the average after-tax salary in each state towards a 20 per cent deposit for the average priced property in that city. It is also assumed that the buyer already has $5,000 saved with a 2.32 per cent interest rate savings account.