First-time buyers eye investment properties

HOUSE price growth is one of the driving forces behind first home buyers choosing a particular property when they make their debut onto the property market.

House price growth is one of the most important factors for first time buyers.

HOUSE price growth is one of the driving forces when buyers make their debut on the property market.

While property prices continue to soar in Sydney and Melbourne and steady growth continues in most other capital cities, affordability remains the biggest concern for entry-level buyers looking to snap up a home for the first time.

St George research, which quizzed 1000 first-time buyers, found being able to get a foot onto the property ladder does take discipline — one in four say they have to compromise to make the great Australian dream come true.

St George’s general manager of retail banking Ross Miller says the research highlighted that many new borrowers were looking at properties that had potential to be an investment.

“After affordability, buying in an upcoming and coming area with potential house price growth has become the most important priority for first home buyers,’’ he says.

“First home buyers are wise to view their purchase as an investment.”

Getting onto the property ladder means you often need to compromise.

The findings show one in two first-time buyers (49 per cent) have had to compromise on location and almost the same have had to compromise on price (46 per cent) when signing on the dotted line.

Home loan interest rates remain at record low levels. Many variable and fixed rate loan deals are below the four per cent mark and another rate cut is strongly predicted for next week when the Reserve Bank of Australia board meets again.

This would see the cash rate fall to just 1.5 per cent.

Mortgage Choice spokeswoman Jessica Darnbrough says there’s no doubt “first home buyers are savvier than ever.”

“They know that interest rates are sitting at all time lows and property prices are rising across a wide range of markets, and as such, they see a great opportunity to get on the property ladder and start building a profitable financial future,’’ she says.

Latest Mortgage Choice data shows 36 per cent of property investors were first-time purchasers.

Darnbrough expects to see a continued climb in the number of first home buyers choosing investment property in areas they can afford before they buy a property to live in themselves.