The Property Investment Professionals of Australia (PIPA)’s 2018 Investor Sentiment Survey revealed approximately 36 per cent of first-time buyers are looking to invest in property rather than purchase a home.
PIPA chairman Peter Koulizos said that given such popularity, so-called ‘rentvesting’ will be here to stay for the foreseeable future.
“What this insight shows us is that first-time property buyers generally have probably been more active over recent years than official statistics originally recorded,” Mr Koulizos said.
“The Australian Bureau of Statistics (ABS) publicly admitted issues with first home buyer statistics from 2012 to 2016, in part due to some lenders only reporting loans to first home buyers who received a First Home Owner Grant.
“Of course, most grants were restricted to first-timers buying a new property as their home, not as an investment many years ago.”
Additionally, ABS statistics showed about 18 per cent of dwellings financed were to first home buyers.
With the official data revised, Mr Koulizos said first-time investors were now being counted, yet there is still the potential of statistical anomalies.
“There’s no doubt that the softer market conditions are making it easier for first-time buyers when it comes to purchase prices, however, lending restrictions are conversely making it more difficult for them to secure finance,” Mr Koulizos said.
“On top of this, it appears that recent political assertions that first-time buyers are only one in seven purchases â€“ or 14 per cent â€“ is factually incorrect.
“It seems that the dream of property ownership has remained alive and well for some time, with many first-timers opting to improve their financial futures by investing in more affordable locations while renting elsewhere.”
The survey also saw 83 per cent of first-time buyers purchasing existing property, despite grants available for the purchasing of new property.
“This is partly due to affordability considerations with established properties generally available for lower price points than new, plus the majority of all investors always prefer existing properties,” Mr Koulizos said.
Because of the high rates of first-time buyers purchasing existing property, Mr Koulizos added this was one area of concern about whether proposed changes to negative gearing in order to increase supply may not have been thoroughly considered.
“Established property has greater capital growth and any tax benefits associated with new property generally doesn’t make up for comparably poorer price performance over the long term,” he said.
Previously, Mr Koulizos said proposed changes to negative gearing fail to understand how property investors operate within the property sector.
“Property investors provide housing for 30 per cent of Australians at a time when spending on social housing is at an all-time low,” the chairman said.
“Also, contrary to media headlines, only about 70 per cent of investors own one property, so the concept of ‘greedy investors’ is not supported by the facts.”
Sasha Karen, Smart Property Investment, 5 December 2018