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Youthful solutions
Despite the perception that they have been priced out of property markets
first home buyers and those under 30 have adapted their buying habits to
overcome issues faced in our evolving property markets. This has seen the
younger generation change the way they buy, use and invest in property to
suit the way they want to live, their budget and investment strategy.
Factors affecting buying decisions
•
Affordability
– The biggest driver changing buying habits of those under
30 has been the deteriorating affordability of property over the past few
years. This saw the average loan size for a first time buyer reach $326,000
in March 2015, 58 per cent higher than 10 years earlier.
•
Lifestyle choices
– Younger buyers have adapted their buying
requirements in order to keep their current lifestyle by buying a smaller,
cheaper property or by becoming investors, searching for positively geared
properties to boost their regular income.
•
Location
– Social amenities such as nightclubs, cafes, pubs and
entertainment are particularly important to the younger generation. Family is
another factor which determines the location and type (occupier or investor)
of buyer first home buyers will become.
•
Income and employment
– Rising levels of youth unemployment,
especially in regional centres, has seen job security concerns become a
major inhibitor to those under 30 purchasing a property.
Changing buying intentions
Many of these buyers have shifted from seeing property as just a place to
live to an asset that plays a vital role in their investment strategy. Research
from Realestate.com.au shows that 23 per cent of those under 30 searching
for property were investors. In addition, 16 per cent of first time buyers are
looking for an investment and 50 per cent of renters, who don’t currently own
an investment, would consider becoming an investor in the future.
New buying habits
•
rentvester®
– This buyer is currently renting and loves their lifestyle.
The problem is that they can’t afford to buy in their current area. Rather than
move these buyers purchase a property in a more affordable area, and rent
that property out while they themselves continue to rent.
•
Team up
– Younger buyers have looked to overcome the affordability
challenge by splitting and sharing the cost involved in purchasing a
property. They have done this by teaming up with a family member, friend
or business partner in order to buy a large property to co-inhabit or as an
investment.
•
Mr & Mrs Fix it
– Young families have looked to get into a larger house in
their preferred area by purchasing an older, smaller, rundown and cheaper
home. Generally, these properties are in need of major renovation; however,
they allow buyers to add rooms and levels as their family grows.
•
Buy now pay later
– Capital city markets have seen strong growth in the
popularity of apartment living. Younger buyers have looked to purchase off
the plan to delay the timing of mortgage repayments. It allows them to pay
a deposit now and deal with finance costs when construction is complete.
•
Thanks mum & dad
– Parents have ridden the property cycle over the
past few decades providing many with outright ownership of their homes.
This has in turn allowed them to use the family home as security to go
guarantor on their children’s mortgage or provide some cash to help out
with the deposit.
0
10
20
30
40
50
60
70
%
Established house/
townhouse
New house/
townhouse
Established
apartment
House & land
package
New apartment
Block of land
Owner occupier
Rural property
Undecided
Investor
First Home Buyers - Type of property sought
Source: Residential Consumer Satisfaction Study (Realestate.com.au)