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:
- 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.
- 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.
- Direct property investment has tax advantages of negative gearing and depreciation.
- 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.
Source: Property Observer