Gen Ys willing to miss out on food and alcohol to buy investment property
Two-thirds of Gen Y borrowers are willing to eat less, while nearly half are willing to miss out on a holiday in order to buy their first investment property, research compiled by Mortgage Choice has found.
According to the mortgage broker, 43% of Generation Y first-time property buyers will buy an investment property as their first purchase, foregoing the first home owner grant and first home buyer concessions to “build a nest egg rather than build a nest”.
The 2011 First Time Property Investors Survey found that buyers in Gen Y – those buyers born between 1980 and 1994 – do not conform to the commonly held stereotype of wanting everything delivered on a platter.
Instead they are willing to make significant lifestyle sacrifices in order to buy an investment property.
The findings come as first-home buyer numbers continue to fall, with just 20,000 (16% of buyers) buying their first property in the March 2011 quarter according to research by the Real Estate Institute of Australia and Deposit Power.
Two-thirds of Gen Y borrowers say they will cut back on general day-to-day spending, while 40% say they will spend less on alcohol to get onto the property ladder.
A quarter will delay buying a car, take a higher-paying job, take an additional job or delay having children to help fund their first purchase.
Mortgage Choice spokeswoman Kristy Sheppard says the findings call into question the concept of the “Great Australian Dream” for people under 30.
“Is it still a home, is it property in general – whichever type they can afford – or is it simply about investing in an asset they expect to bring in income and/or appreciate in value?”
Property analysts such as Margaret Lomas have commented on the increasing trend among Gen Y borrowers to make their first home purchase an investment property.
Lomas told SMH there is a group of young investors who elect to rent in the inner city and then deploy their discretionary income to "get an investment property somewhere else that is cheaper, has better [rental] yield than the inner city and a better prognosis for future growth".
According to Sue Prestney, a tax specialist with the Institute of Chartered Accountants, there are “a hell of a lot of” young investors on good salaries who are paying some board and “happily buying their [first] investment property”.
The increasing desire among Gen Y to buy an investment property is in line with a key finding of the survey that the renter-investor market is set to nearly double over the next two years.
Out of the 1,060 respondents who plan to buy their first investment property over the next two years, 19% will be first-time buyers.
More than a quarter of respondents (28%) were classified as Gen Y, with a fifth of these saying they are likely to rent out one or more rooms in their houses to help cut costs.