An increasing number of people in the Australian housing market are buying properties to rent out, rather than for occupation themselves.
According to the National Australia Bank Residential Property Survey of Q4-2016, first time home investors accounted for 13.5% or all new property sales (12.2% in Q3), and 12.9% of all sales of established property in Q4-2016 (10.6% in Q3).
Many of these first time home investors are younger people, particularly the generation known as Millennials or Generation Y – those born between 1982 and 2004.
Millennials are typically well educated, tech savvy, entrepreneurial, nomadic and adventurous. They need to be flexible, preferring to travel, move jobs easily and therefore have rapidly changing requirements in terms of their lifestyle solutions. Millennials will prefer comfort instead of security, lifestyle instead of retirement, and versatility instead of restriction.
House prices have soared and it is a financial struggle to get in to the housing market -the increasing unaffordability of comfortable homes in preferred areas is mitigating against home ownership for personal use, for these younger buyers. They don’t want to be saddled with mortgages while living in a tiny box in the outer ’burbs just to satisfy some societal expectation. They would prefer to invest in property in more affordable locations, and rent and live debt-free in the inner city — close to work, friends, public transport and good coffee.
So considering all of the above – it is about some Millennials accepting they can’t afford to buy where they want to live so they’ll be tenants there instead, and buy an investment property — not necessarily where they want to live, but one in a high-growth area. They then enjoy all the lifestyle and flexibility benefits of renting in a preferred location close to the beach, public transport, cafe culture, their friends and work while still having the security of investing in property elsewhere.
