While many believe an investment property, rather than a home, offers an easier way for people to break into the property market, there are signs that too is becoming a harder task.
Results from Mortgage Choice’s annual Investor Survey have revealed that nearly a third of Australian investors, 30.9%, took more than four years to save for a deposit for an investment purchase.
John Flavell, Mortgage Choice chief executive officer, said it should come as no surprise that buyers are facing a significant period of time before they have enough money tucked away to go through with a purchase.
“Over the 12 months to June, property values have risen 10.0% across the combined capital cities. And while this is impressive growth, it is made all the more impressive when you consider that this level of growth is actually significantly lower than the last couple of years,” Flavell said.
“Since 2013, property prices have skyrocketed across most markets. As a result, investors and home buyers are finding it is taking them longer to save the deposit they need in order to purchase property,” he said.
Flavell said the impact of strong price growth on peoples’ ability to afford a property, be it a home or an investment purchase, is being exacerbated by a rise in the cost of living.
“According to the results from the Investor Survey, 64.7% of investors said they put less than 20% of their regular paycheck towards their deposit,” he said.
“Most people can’t afford to save more than that each month. And when you consider that the average mortgage size has grown 23.4% since 2012, while the average wage has risen just 8.8% over the same time period, it isn’t surprising to see so many Australians saving for years in order to buy property.”
While the issue of housing affordability and government intervention is always a contentious topic, Flavell said actions should be taken to ensure “property ownership is still an attainable goal for all Australians as well as our future generations.”
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