More and more Australians are making their first property purchase an investment property according to a survey by Mortgage Choice.

According to the latest Mortgage Choice Investor Survey, 36.6% of responding investors were first time buyers compared to the 21.1% recorded at the same time last year.

Mortgage Choice chief executive officer John Flavell said while the increase was significant, it wasn’t surprising as people strive to live in desirable areas.  

“With prices rising across most capital cities, purchasing property near or close to the city is becoming increasingly difficult for buyers – especially first home buyers,” Flavell said.

“As such, we are seeing an increasing number of first time buyers purchasing investment properties before an owner occupied property as this allows them to buy where they can afford and still live where they want to,” he said.

While the past 12 months has seen an increase in the number of first time buyer entering the investment market, Flavell believes the next year will see that number take a downturn as lenders abide by guidelines issued by the Australian Prudential Regulation Authority.

“As a result of APRA’s decision to cap investment lending growth at 10% for lenders, many of Australia’s banks have started to make some sweeping changes to their investment lending policies,” Flavell said.

“Moving forward, I think we can expect these changes to reduce the current level of investment lending.

“Unfortunately, it won’t be the middle-aged, middle-class or foreign investors who are locked out of the market, it will be first home buyers - those struggling to get a start.

“And I can see the gap between the ‘property haves’ and the ‘property have-nots’ widening as a result – especially if property values in markets like Sydney and Melbourne continue to grow.”