An article published in the Sydney Morning Herald earlier this year clearly outlines the Australia Bureau of Statistics’ (ABS) admittance that first-home buyer statistics have been flawed since October 2012.
Yet we’re still seeing headlines such as ‘Young priced out of market’ and ‘First-home buyers on the decline’ – but if anyone had bothered to dig a bit deeper, the reality would be “First homebuyers get smart and opt for investment property”.
This grinds my gears for two reasons: one, it presents a false market and two, it’s discouraging would-be first-time buyers from getting into the market.
The notion that first-home buyer numbers have fallen to record lows because investors, driven by low interest rates, price them out of the market needs to end.
There’s no denying prices are heating up, but analysts continue to twist this to proclaim that an ‘affordability crisis’ is the barrier stopping first-time buyers from entering the market.
This flawed commentary has reached all the way to the Treasurer of the nation.
A trend I’ve repeatedly observed as a buyer’s agent is young, educated buyers opting to make their first purchase an investment property and continuing to rent.
They’re in the market, playing it smart and optimising their position. What they’re not doing is showing up in ABS stats on first-home ownership.
Watching this trend develop is personally satisfying. Whether they’re We Find Houses clients or not, I enjoy seeing any buyer entering the market the smart way and learning that residential investment property is the best vehicle for wealth creation.
Given current market conditions, I would call it ‘best practice’ to make your first property an investment property.
It gives you flexibility, is generally cheaper than buying a property for your principal place of residence and it gives you room to build towards a portfolio.
Young buyers are learning that living in their ‘own’ home has little benefit for cashflow and actually encumbers them with bad debt.
Buying an investment property first up does mean sacrificing stamp duty and first-home buyer grant concessions, but with government concessions being tightened across the country, this perceived penalty is diminishing as time goes on.
I see clients in their mid-20s who know they need to take action to secure their financial future but don’t want to compromise their lifestyle or make a move that might hamper their career, and that’s where buying an investment property can provide those perks among other things.
Young buyers are now thinking smart about property investment. They’re learning in droves that their first purchase doesn’t have to be somewhere they want to live, but rather an investment they’ve sized up as the right financial step.
They’re also able to maintain their lifestyle by renting where they do want to live and buying where they know is smart.
If you’re reading this and you’re new to the property market, take my advice and don’t listen to the headlines. With some savvy financial planning, sound property investment advice and a mentor to coach you, you’ll be on your way to owning your first investment property in no time.
Don’t know what step to take next? Call 1800 600 890 and speak to one of our property investment specialists.