Four reasons why more first home buyers are now first time investors

Anthony Cordato, the Cordato Partners property investment lawyer, says many first-time property buyers are buying an investment property to rent out, instead of buying a home to live in.

He said the trend made perfect sense for four reasons:

1. Since 2011, the withdrawal of the first-home owner grant and stamp duty concessions has encouraged first-home buyers to buy an investment rather than a home.
2. Lenders, particularly second-tier lenders, offer 30-year investment loans with five years’ interest only followed by 25 years’ principal and interest, which means low repayments for five years.
3. Direct property investment has tax advantages of negative gearing and depreciation.
4. Availability of new stocks of home units and house and land packages is increasing.

"First-home buyers have merely changed into first-home investors," he suggested to the Australian Financial Review.

In October, 11.6% of home loans were made to first-time buyers, as against a long-term average of 20%, according to the Australian Bureau of Statistics.

You may also want to read:

Buying an investment property while renting: The pros and cons