New research from the Property Investment Professionals of Australia (PIPA) has found that 36 per cent of first-time buyers opted to invest in property and continue to rent instead of buying a home to live in over the past 12 months.
The finding was contained in the 2018 PIPA Investor Sentiment Survey, which also found more first-time buyers were purchasing existing properties than new builds.
PIPA chairman Peter Koulizos said ‘rentvesting’ as an investment strategy had likely been a trend for some time.
“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,” he said.
According to the latest ABS statistics, about 18 per cent of dwellings financed in Australia were to first-time buyers in September.
Mr Koulizos said revisions to the official data meant that first-time investors were now being counted.
“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,” he said.
“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 found that the vast majority of first-time buyers had opted to buy an existing property, even with State Government grants available to purchase a new dwelling.
In Queensland, the First Home Owners Grant of $15,000 is only available to those first time buyers who purchase a brand new property under $750,000 and plan to live in it.
The Real Estate Institute of Queensland, however, has been pushing for the grant be extended to existing properties as well, even if only in the regions.
Mr Koulizos said established property often had greater capital growth.
Your Property Your Wealth director and buyers agent Daniel Walsh, 28, and his wife Sophie Walsh, 24, own nine investment properties in four states, including three in southeast Queensland, and are renting in Sydney.
Mr Walsh said they would likely continue to rent for the foreseeable future.
“It was cheaper to rent than buy in Sydney and we noticed the amount we paid in rent was less than the yield we could get from a property elsewhere,” he said.
“We have never bought a property over $380,000.”
The three Queensland properties owned by the couple are located at Deception Bay, Crestmead and Raceview.
Drawing on his own experience as a buyers agent, Mr Walsh said often it paid to “rent where you to live and invest in an affordable property with a good return”.
“It is a long-term goal but so far we have created a passive income of around $60,000 â€“ enough to cover our rent, lifestyle and the upkeep of the properties.”
Samanthan Healy, realestate.com.au, 29 December 2018