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Desperate first home buyers are increasingly choosing an investment property as their first purchase, Aussie Home Loans founder John Symond has argued.
Mr Symond highlighted a growing trend whereby some first home buyers are renting in convenient CBD locations and buying more affordable investment properties in the suburbs.
“The first home buyer is copping a bashing, they are really being forced out of home ownership,” he said.
“When you take a place like Sydney, new housing estates that are anywhere near affordable [are often] 30 or 40 kilometres out of the city.
“They would rather rent near the city, near the cool restaurants, near work, and buy investment properties way out. This is why renting in the inner city is becoming a very tight market.”
Mr Symond’s comments echo those of Mortgage Choice chief executive Michael Russell, who said this “paradigm shift” is skewing data presented to APRA, the prudential regulator.
Mortgage Choice surveyed 1,000 first home buyers last September and found that 21 per cent are now electing to buy an investment property as their first property purchase.
“This is significantly up on what that number would have been five years ago,” Mr Russell said.
“They are electing to rent in an area they want to live in and can't afford and are investing in an area they don’t want to live in and can afford.
“This is skewing the comparisons being made. We really hope that the regulators looking at trying to stymie the growth in investor lending will look beneath the numbers. This buying behaviour change is very real.”
Mr Symond was speaking at a recent Genworth event for mortgage brokers.
[Related: Sydney market is ‘overvalued by about 25pc’]
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