It’s never too early to get in to the property market and for many first home buyers, an investment property is now their first purchase.

We are seeing an increasing trend of first time buyers foregoing owner occupation and instead buying an investment property. They see it as a good way to get a foothold in the market and it often also involves shared ownership between siblings and other family members.

For many, the decision is made as a “forced” savings strategy. For others it’s because of affordability issues. They can’t afford their ideal location or housing style of their first dream home and they also don’t have the ability to meet ongoing repayments on their current incomes.

Building wealth through property is as old as the ages and remains one of the most popular investments in Australia. However, caution is required, especially for first time buyers.

Like any good investment, cheapest is not necessarily best and that definitely applies to property.

Without wanting to dampen the enthusiasm of these young buyers, it’s important they realise capital growth is dependent on future demand – for both the location and the type of housing they purchase.

In most cases the property will also be negatively geared so their entire wealth strategy will be based on the eventual sale price, which means it’s important to choose an area with a strong and proven demand for the type of property they purchase. For many of these buyers, they may also have a limited time frame in mind – such as five or ten years – before they might plan to liquidate and buy their own home. This also makes the initial selection a crucial factor.

Until next time,

Jock Bing