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Are First Home Buyers Melbourne's New Property Tycoons?

Historically first home buyers purchase their first home to move out and start their independent lives. This stereotype is changing. While saying that Generation Y home owners are becoming property tycoons is a little imaginative, more and more first home buyers are choosing to lease their property.

What – The latest housing and finance statistics from the bureau of statistics showed in March that investor loans grew four times faster than owner-occupier mortgages, while first home buyer loans dropped to an 11-year low.

Why – Rising property prices are making it increasingly difficult to purchase a home, especially in popular inner-city suburbs. Reductions to the first home buyers grant is also contributing to the reasons for first home buyers choosing to forgo the lump sum and seeing more value in regular rental returns.

How – Many young Australians are choosing to purchase investment properties away from the CBDs and live at home or rent in the suburbs that they want to live but can’t afford to buy in. In doing so, the hope is that their property will appreciate in value and deliver good capital gains when it is sold to help them eventually purchase where they want to live.

There are many benefits to the first home buyer who chooses to invest in the property market. Depending on where the property is purchased and how much rent it generates it may need little or no weekly cash outlay while helping to build equity that can be used to buy a dream home in the future.

Whether you’re a first home buyer or seasoned investor, conducting sufficient research is essential. Buying a cheaper property in the outer suburbs is not always the answer. Buying house and land in most cases leads to significantly more money spent maintaining the property. First home buyers look for a good deal which means buying an established, and often very old property resulting in them having to paint walls, maintain gardens and in many cases replace kitchens and bathrooms to get the property tenanted. Compare this to near new apartments in the CBD or inner-suburbs that do not need any maintenance and where facility upkeep is done on the owner’s behalf by the owners corporation. Ongoing costs are in turn significantly less meaning rental returns can be saved and used to buy a property in a suburb that you want to live in.

High quality inner-Melbourne apartments with excellent resident amenity, well designed spaces, views and close proximity to infrastructure such as universities, shopping and restaurants are highly sort after by renters. Towers like Verve, Milano and Zen apartments in Melbourne CBD have delivered investors excellent rental returns and annual capital growth over the past two to seven years of over 5% with a vacancy rate of less than 1% in most cases. Brand new buildings including Abode318, Prima Tower in Southbank and Ryan & Leveson in North Melbourne are delivering investors significant rental returns and vacancy rates of almost 0%. They are also positioned in quality locations if or when you choose to move into it.

Melcorp Property manages the majority of listings within these towers and has a selection of investor friendly apartments available for sale at the moment. We also have the property management team to lease and manage your new property for you.

Are you looking to invest? Call Melcorp on 03 9663 1117 or inquire below and use our expertise in Melbourne real estate to make money with your property purchase.

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