A recent Roy Morgan Research Consumer Single Source survey has found that investment property loans in Australia has grown by 37 per cent in the last four years, compared to an increase in just 4 per cent for owner occupied loans.
So why the sudden surge in investment property loans? First we need to look at who is buying investment properties.
According to the survey, the 35 to 64 age group accounted for 78 per cent of the increase in growth of investment property loans. The survey also showed that the proportion of over 50’s with an owner-occupied home loan increased while the proportion of under 35’s with owner-occupied home loans decreased.
This could indicate that those under the age of 35 are being priced out of buying their first home, and so its likely that many are turning to other alternatives to get into the property market such as buying an investment property.
It is often hard to buy an ideal home as a first home, so buying an investment property (perhaps a property in a less desirable location) can be a good foot in the door for young people who are looking to make an investment for their future.
Australia’s record low interest rates (which have now been at the cash rate of 2.5% for a year) could be another reason why investment properties are gaining in popularity.
Low interest rates and competitive home loan deals are making it easier for many buyers to afford investment loan repayments and in some cases the gap between repayments and rental income is very minimal, and some may find that they are out of pocket very little.
For those who are looking to buy an investment property, remember it is always important to do your research first and to talk to financial advisors to make sure that you make the right decisions based on your personal circumstances.
If you’re interested in finding an investment property in the Bacchus Marsh area then please don’t hesitate to get in touch with one of the team at Professionals Arbee Real Estate today.