The Property War Between First Home Buyers & Investors

Market Insights
8 years ago
2 minutes

Much argument has been heard around the supposed battle between investors and first home buyers.

While one is vying for an affordable entry into the property market, the other is often a step ahead and snapping up viable investments.

As with any competitive situation, often the playing field is not even, says Sam Elbanna, Managing Director of CPM Realty in Sydney.

If there is a property war, then the investors are winning. 

They have more experience, better credit, and in most cases, the confidence to act quickly, he explains.

For first time buyers the priority issues are usually affordability and location. 

Most buyers are looking for something close to the city and close to work, which is where the investors begin driving competition. Smart investors will recognise these areas as the key hotspots and are also looking in these areas.

‘However, brand new developments in Surry Hills, Rosebery and Alexandria pose fantastic opportunities for those looking to take their first step into the market’, says Elbanna.

According to Elbanna, Off-the-plan purchasing is making an impression among first timers.

Most inexperienced buyers often don’t realise how cost effective off the plan purchases are. Many assume that because it is a new development it is going to cost them more. 

But seeing as many off the plan purchases occur months ahead of moving in, they actually afford the time to save a larger deposit and often allow to qualify for the First Home Owners Grant if applicable, Elbanna explains.

‘Off the plan purchases represent some of the best opportunities for first time buyers to not only move out of home, but to move into the market as investors and rentvestors’, he says.

Rentvesting, where buyers are taking the opportunity to buy a new apartment and rent it out to pay off their mortgage faster, is fast turning into a growing trend. 

With the large number of young professionals looking for homes and willing to pay higher prices for better locations, the potential for return off a purchase can be significant and make for a great way to get into the market in more affordable areas, while renting in locations closer to work or the CBD as a lifestyle choice.

‘Often it is down to know-how and inexperience that stalls younger buyers or first-timers from getting onto the property cycle’, says Elbanna.