Study shows FHB investors least well off

Study shows FHB investors least well off

Posted on Tuesday, June 16 2015 at 2:00 PM

A new study by comparison website has found that first homebuyer investors are the least well off in the Australian property market despite being in a better financial position.

The survey of more than 1,100 Australians
found that 14 per cent of recent or prospective first homebuyers (FHBs) are
buying their first home as an investment. Generation Y (aged 18-34) are more
likely to be FHB investors than any other age group, with 64 per cent of FHB investors
from that category, followed by gen-X (aged 35-54) with 33 per cent.

These FHB investors are more likely to
have a bigger household income than owner-occupier FHB – almost double the
proportion have a household income of more than $200,000 (17 per cent) compared
to FHB owner-occupiers (9 per cent). More than half of first-time buyer
investors (59 per cent) have a household income of $100,000 or more, compared
to 46 per cent of FHB owner-occupiers.

The study found that purchase budgets are
also bigger for FHB investors, as 52 per cent are spending more than $500,000
compared to just 35 per cent of FHB owner-occupiers. More FHB investors have a
budget higher than $1 million compared to FHB owner-occupiers, too.

First homebuyer investors are less likely
to buy their first property in the same city in which they live (79 per cent)
compared with FHB owner-occupiers (91 per cent). Forty-eight per cent of FHB investors
are likely to buy apartments, townhouses and villas compared to just 36 per
cent of owner-occupiers.

Michelle Hutchison, money expert at,
said despite deeper pockets than owner-occupied FHB, FHB investors are finding
it the toughest in the property market.

“First homebuyers are among the lowest
levels we’ve ever seen, currently at just over 15 per cent of all home loans
financed, and it has been steadily declining for over a year.

“Government grants for FHBs have declined
while property prices have grown considerably over the past few years. And now
with some lenders pulling back on their attractive rates to investors, first-time
buyer investors are the worst off.

“However, this is good news for FHB
owner-occupiers, who are the majority of FHBs, as it could help alleviate the
property market heat, which is being pushed by investors and refinancers.

“Whether you’re buying your first home to
live in or as an investment, prospective borrowers need to be careful with
over-stretching themselves as it’s not worth the financial risk if you can’t
afford to jump into the market. Work out how much you can afford to repay with
a buffer for rising interest rates and stick to a budget or face financial
stress down the track.”

Capital city results

  • Sydney has the highest number of FHB
    investors, followed by Melbourne and Perth, while Adelaide has the least
  • Sydney FHB investors are more
    likely to have a budget over $500,000 than FHB investors in other capital
    cities, while Adelaide were the least likely
  • Perth and Brisbane FHBs are the
    least likely to have a budget over $1 million, while Sydney and Melbourne were
    the only cities to have FHB investors with property budgets of over $1 million
  • Sydney FHB investors
    were more likely to have a household income of more than $100,000, followed by
    Melbourne, than Perth. The least likely is Adelaide.

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