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The Rise of the Junior Investor



 

As housing prices steadily grow in value, first time property investors are looking beyond first home ownership and are instead purchasing with a view to grow their portfolio.

The ‘Australian dream’ as we know it is evolving. Coming of age for many young people now means looking to investments and finding security in future personal wealth, rather than short term experiences.

According to the realestateVIEW First Home Buyers’ report (2014), many first homebuyers are now purchasing their first home as an investment property- particularly with co-ownership. For the younger market, there are a few reasons that these buyers are looking to investing in property, instead of occupying property.

 

You can’t have your cake and eat it too

 

Lifestyle factors motivate young buyers to invest instead of buy. If they are renting in a desirable, trendy location, it is likely they cannot afford to purchase a property there. Savvy first homebuyers are looking to invest in a suburb further out and use the rental income of an investment property to boost their pocket and pay off a relatively smaller mortgage.

 

Sacrificing a ‘live in CBD lifestyle’ is now a consideration as outer suburbs bring viable rental yields, making investment feasible, as well as encouraging younger buyers into the market.

 

All bets down

 

Educated young investors look to purchase properties in suburbs that are speculated to be growing and eventually more valuable.

 

Remembering that this demographic has grown up with anecdotes from older relatives – where property prices have tripled in their lifetime – these young investors are looking for a low-entry point before prices extend beyond their reach.

 

Young buyers also look to areas that are rapidly gentrifying, eventually evolving into highly desirable areas. Buyers in this demographic are putting their bets on up and coming areas, with an expectation that the either the property will gather mass capital gains, or the area will improve on lifestyle factors through gentrification and be desirable to occupy in future.

 

Generational shift

 

Studies demonstrate Gen X’s and Y’s are more comfortable with living with their parents for longer, and as the Australian demographic diversifies, so too do purchasing behaviours.

 

The lure of a financial boost from an investment, combined with cultural influences makes living at home more feasible for this generation. In fact, more than half of Australians aged 18-24 still live with their parents*. Rather than key this up to generational apathy , it is about understanding the influences behind this and financial motivations that drive changes in the market.

 

For instance, the influx of refugees to Australia’s shores in the late 1970s through to the early 1990s has now produced a generation of first homebuyers that have been ingrained with the value of fiscal security for the future. Faced with the insecurity of their parents’ past experiences, first to second generation Australians are now in the life-stage of purchasing their own home.

 

hodges_julianaugustiniAbout the author: Julian Augustini is one of Bayside’s leading real estate identities. Julian’s exceptional knowledge and understanding of the Bayside area has come from more than 19 years in the industry. He is a Director of Hodges’ Brighton, Sandringham and Beaumaris offices, a Licensed Estate Agent, and a passionate, energetic Auctioneer. For all properties Julian has on the market, have a look through the Hodges Brighton agency page.

 

 

 

 

 

 

 

 

 

Statistics sourced from

 

 

*http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0?OpenDocument