Investor and first home buyer struggle dubbed a "property war"

Investor and first home buyer struggle dubbed a
Investor and first home buyer struggle dubbed a "property war"

With soft first home buyer numbers recorded, and suggesting this will continue over the year, the comparison site is referring to the struggle between investors and first time buyers as a ‘property war’.

There was a slight increase in the proportion of first home buyers of all owner-occupied loans financed in January 2014, from December’s 12.7% to January’s 13.2%, as recorded by the Australian Bureau of Statistics however this is still five times less than investment loans financed.

With investment loan commitments in January among the highest levels recorded, over $8.4 billion, this was starkly in contrast to first home buyers’ $1.75 billion.

Michelle Hutchison, money expert at, said that investors’ strength is likely to continue their hold over the first timers this year.

“Investors are holding some first home buyers hostage from the property market as they take advantage of low interest rates and high yields. If you’re a first home buyer and not prepared, you won’t get out alive – with a property to own,” said Hutchison.

“Investors are stronger in the property market than first home buyers because they can use equity from their existing home and take advantage of low rates to snap up properties faster. While first home buyers are slowed down by the cost of saving for a deposit and upfront fees with no existing equity,” she said.

“If this trend continues, we can expect to see property investors grow even stronger, and likely to hit almost $10 billion in home loans financed per month by December.”

Whether any of the investors were first time buyers, purchasing for an investment and not a home, has not been identified.

Despite the metaphor, Hutchison encouraged first home buyers not to be intimidated by the investor presence in the market, noting that a stable job, a saved deposit and an understanding of home loans should leave these buyers comfortable.

Similarly, she noted that a huge deposit isn’t hugely necessary, with many offering loans of up to 3% deposit, that setting a budget is crucial and that some government incentives are on offer.

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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