FOMO driving housing battle: First home buyers versus investors

Queensland is now ground zero in the battle for affordable property between first home buyers and investors, amid fears many will miss out with the odds skewed in favour of landlords.

Queensland is now ground zero in the battle for affordable property between first home buyers and investors, amid fears many will miss out with the odds skewed in favour of landlords.

This as the 2024 Rising Stars report by Canstar and hotspotting’s Terry Ryder predicted Brisbane would become Australia’s top property market performer this year, driven by buyer demand, continued uplift in prices in most suburbs, low vacancy rates, strong rent rises and massive infrastructure spends in the lead-up to the Olympics.

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Brisbane on a Saturday morning, the greater capital region is expected to top the country this year amid rising demand and Olympic sized infrastructure growth. Picture: Tara Croser.

Canstar’s finance expert Steve Mickebecker warned first home buyers are in for “a rollercoaster ride with FOMO now driving the segment amid rising property prices”.

“The competition between first home buyers and investors is reminiscent of 2021 when it made buying into the housing market so uncomfortable for first timers.”

Investors and first home buyers are running neck and neck growth wise – with latest Australian Bureau of Statistics figures show lending up more than 20 per cent for both annually – but clearly weighted in favour of landlords ($9.53b in home loans in February) compared to first timers $4.93b.

“Rising prices drive activity from both investors and first home buyers, the former looking to maximise capital growth and the latter to establish a foothold in home ownership while they can,” he said.

“Looking at all their purchasing options is paramount for first time buyers, including government grants, stamp duty concessions and any family assistance.”

Buyers agent Eddie Dilleen who deals with investors has seen a rise in calls for help from people wanting to become first time owner occupiers too. Picture: Tim Hunter.

Buyers agent Eddie Dilleen of Dilleen Property – who personally owns 100 homes – said owner occupier calls for help were rising. “There have been more people saying ‘can you help with that’ in the last few months but that’s not our specialty. They have a set criteria for what they want to live in whereas for us it’s trying to buy a bargain that has the highest return regardless of what type of property it is”.

Mr Dilleen’s top two tips for first homebuyers wanting to be competitive in the current market were to prioritise finance readiness and make enquiries with agents to be first to properties before they go on the market.

“Because the moment it goes online, it’s just a bloodbath, everyone’s fighting over it and the agent is just getting calls and calls and not answering the phone half the time because they’ve got 100 enquiries.”

With investors able to write off costs including fees for agents, many fledgling househunters are now considering becoming landlords instead of owner-occupiers to get into the market.

Buyers' agent Lloyd Edge said many first timers are switching to become rentvestors to cope with rising market prices.

Buyers agent and Aus Property Professionals founder Lloyd Edge, who owns 18 properties, said it was a growing trend for many buyers to become investors to cope with increased prices.

“I often have people come to me looking to buy a home and when we sit down and look at the numbers people will then consider just getting onto an investment ladder, buying something that’s more affordable for them and get it renting. There are obviously other benefits with that like depreciation.”

“They look at their budget and realise that they can’t necessarily afford their dream homes,” he said. “Just buying an investment property elsewhere that’s more affordable is something that a lot of people are doing … Getting on the investment ladder, even if that’s (just) to help them buy that dream home later on.”

Canstar editor-at-large Effie Zahos expects the market to get even tougher ahead of rate cuts.

See the latest PropTrack Home Price Index

The housing market is not likely to get any easier to break into either, with personal finance expert and Canstar editor-at-large Effie Zahos expecting even hotter competition with interest rates tipped to fall towards year end.

“The sentiment out there is that rates will go south and there comes a feeling that by making it more affordable for people to get into the market, it will mean more people jumping into the market. A lot of people want to get in ahead of that.”

“In that sense, a rate cut may counteract itself in that it does create additional pressure for buyers. Demand is growing because people feel they have to get in before things get more expensive.”

“If you can get in, and that purchase is sustainable for you, get in. Property is like any other asset. Timing the market is difficult. It is better to try to only focus on what is in your control. Property is one of the most important asset classes and it does create wealth. Those who (purchase) do grow their wealth faster.”

Ms Zahos said compromise was the key word for first home buyers now.

“Getting into the market may mean a unit over a house. It may mean it’s not your first choice suburb or even your second.”

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Originally published as FOMO driving housing battle: First home buyers versus investors