First home buyer numbers are at record low levels, with the most recent national figures placing them at just 12 per cent of the new mortgage market across Australia, and as low as four per cent in some capitals, like Sydney.

While those taking the plunge and picking up a new home are dwindling, the number of twenty and thirty something’s still living with mum and dad has never been higher.

Many of these fully-grown young’uns still crowding the nest have good jobs and a decent income, after finishing university study or apprenticeships and getting some good years of work experience under their belts.

However, in some cases this still leaves them with not quite enough borrowing power to go it alone on a full mortgage.

And it’s not surprising: median house prices have grown disproportionately to wage levels over recent decades and are now more than eight times the average income in some capital cities.

Some savvy youngsters have come to a couple of realisations. First, waiting and saving for long periods of time can be counter-productive. Another year spent saving extra money might mean a further 10 per cent growth in house price, which would put them behind where they are now.

Secondly, you don’t necessarily need to say goodbye to ma and pa to make a start in wealth acquisition through real estate.

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Instead, they are buying investment properties to get a foot on the ladder, without having to pack their bags and move out.
They usually either buy in a favourite suburb, hoping to move in to the property sometime in the future; or they purchase a home in an affordable area, with high rental demand, to build a positive cashflow portfolio.

In the latter case, they plan never to move in.

Instead, that investment property continues to bring in rental income, which helps offset their mortgage repayments, while they are also able to avoid the rent or grocery obstacles faced by other home owners. Buying now, rather than spending more time saving, means they can also access equity as the property grows in value.

Tim McIntyre is the senior real estate reporter for the Daily Telegraph and News.com.au.
Over the past decade, he has attained widespread knowledge of Australia’s many unique property markets and is an authority on all things buying, selling and investing.
His commentary appears every Saturday in the Daily Telegraph Real Estate lift out, as well as online at news.com.au.

www.news.com.au/realestate

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