Assetz® News - Property investment before owning a home

Property investment before owning a home

23rd January 2006 |

An unusual property investment trend has developed in Australia in which people are investing in property before settling down into a home of their own.

The news comes after industry experts worldwide have been advising people to invest their money in property rather than the stock market as people across the globe become increasingly aware of the potential gains from selling or renting out property.

New research in Australia commissioned by Wizard Home Loans has suggested that a growing number of people are now taking this a step further and are prepared to forgo the advantages of owning a personal property for many years.

There are now 61,000 of these "first home investors", which is up 15 per cent on the statistic for 2004. Wizard Home Loans chairman Mark Bouris has said there are signs that the trend will continue to grow as first-time house seekers decide better deals can be found by taking buy-to-let mortgages or buying and selling on the basis of house price increases in certain areas.

"The new research confirms a trend we've seen at Wizard," said Mr Bouris.

"Young Australians in particular are choosing an alternative road to home ownership, for a range of financial and lifestyle reasons," he added.

There are few signs so far of the trend gaining momentum in the UK, with high house prices generally alienating first-timers from the property sector rather than enticing them. On the other hand, a December survey from propertyfinder.com found that there had been a recent re-awakening of first-time buyer interest and this could potentially open the door for a similar approach in this country.

Mr Bouris has in fact indicated that it is because of high prices that young Australians are becoming increasingly business-smart in their attitude to the property market.

"Although affordability is improving, prices are still high and young people are taking up smarter strategies to get into the market," he said.

"Of course some may have adopted this strategy in the past, but now the research confirms that first home investors are a distinct group in the market and are here to stay.

"Chances are we will continue to see new patterns and groups emerge in response to lifestyle and demographic changes, confirming the richly diverse makeup of Australia," he added.

Theoretically, there is nothing to prevent the same thing happening in the UK, with property investment certainly becoming a lifestyle choice for many UK investors. A recent survey from Standard Life Bank found that buy-to-let investment was providing many people with a "flexible way of living" because of the huge potential gains and reduced working hours often involved.

Several reports in 2005 found that a growing number of young couples and individuals were choosing to stay in the same house as their parents for many years after completing education, with three-generation households becoming all too common.

With two thirds of those surveyed by Wizard Home Loans declaring that property investment is the first step towards realising the goal of owning a home, the Australian solution to this problem is perhaps unusual at this stage.

As property investment increasingly becomes a way of life, however, the UK may see a growing number of its residents taking this brave yet potentially lucrative route to homeownership.