A significant portion of first-time buyers (36%) opted to invest in property and continue to rent instead of purchasing a home for residence over the past year, according to the 2018 Property Investment Professionals of Australia (PIPA) Investor Sentiment Survey.
PIPA Chairman Peter Koulizos said that while it was the first time that respondents were asked about the particular topic in the annual survey, one could presume that rentvesting as an investment strategy had been practised for a while now.
He focused the attention on the possibility that first-time property buyers have been more active over recent years than official statistics originally recorded.
The Australian Bureau of Statistics (ABS) publicly confirmed that there have been issues with first-home buyer statistics from 2012 to 2016, partly because some lenders only report loans to first-home buyers who received a First Home Owner Grant. In its latest statistics, ABS indicated that about 18% dwellings financed in Australia were sold to first-time buyers in September.
While modifications to the official data meant that first-time investors were now being counted, issues could still persist in the statistics, according to the government agency.
The research also found out that the majority of first-time buyers would rather purchase an existing property despite the availability of State Government grants, which may be used to purchase a new dwelling.
“About 83% of first-timers purchased existing property, with only 14% buying new or off-the-plan,” Koulizos said.
Koulizos added that a reason for this behaviour is the fact that established properties’ prices are lower than the values of new properties. Additionally, the majority of investors prefer existing properties. Koulizos said that this is the reason why proposals to alter negative gearing policy in order to increase supply were not well-thought-out.
“Established property has greater capital growth, and any tax benefits associated with new property generally doesn’t make up for comparably poorer price performance over the long term,” he said.
Finally, it was also noted that 63% of all survey respondents said that they would consider rentvesting as a property investment strategy.
Kay Rivera, Your Investment Property, 6 December 2018