The Brewing Competition Between First-homebuyers and Investors
The property market is currently enjoying all the attention that it has been getting since more and more Australians are finding it appealing to buy their first home or invest in a property for future use due to different incentives the government has been offering to potential buyers. However, the reason why so many are starting to become interested in investing in property is the very same reason why there’s some competition going on between the two kinds of market buyers.
Agents are reporting that first-home buyers are beginning to see some very stiff competition with investors who are taking their chance to bid on properties that are sending prices higher. Investors are registering to buy property instead of investing money in the bank where interest rates are much, much lower. So, what fueled this activity from investors in the country? It’s due to the latest owner-occupier housing boom from buyers who are keen to use cheap mortgage deals to secure spacious homes. Last year, when the pandemic started to affect so many people, we had to adjust to a new way of living. Remote work became the norm so homes that are conducive to working daily became a requirement.
In April, investor loans in Australia reached a four-year high. It rose by 2.1% in investment loans and NSW rose to about 2.5% according to the Australia Bureau of Statistics. It looks like more investor activity will be seen in the coming months and price growth in the unit market will continue.
Experts are saying that the increase has a lot to do with investors taking confidence again in the improving rental market, which would be a huge opportunity for stronger and better rental yields. First-homebuyers will have to face some strong competition against investors, and this will most definitely make the buying challenging for them.
Investors are currently competing for homes to purchase at different price points. Some were able to outbid several first-home buyers, so we can say that there is a massive influx of investors coming in and most of them are cash buyers according to reports. Interest rates are so low right now, but unfortunately, the inflation rate is on the rise so experts don’t think that cash in the bank is a good idea. Increasing property prices are expected to trickle down but this also means tighter competition.
There is also the matter of buyers opting to buy property in affordable states such as Queensland. The prices are moderate compared to major states such as Sydney and Melbourne so many Australians are more open to moving to the sunshine state.
The steady return on investors is of course a good thing, however, they are more interested in the traditional housing market more than the apartment market. Sales director and auctioneer Arch Staver is assuming that this is from Baby Boomer investors or those who believe that investing in property rather than in the bank is a smarter move. For now, first-home buyers would have to accept that the bidding wars are not going to be simple.