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Home owners are adjusting to market conditions to help them enter the market. This adaptation is driving a variety of trends, especially among younger demographics.
As highlighted in the State of Real Estate Report from InfoTrack, fluctuating prices and strong competition from other prospective home owners are driving a degree of urgency among borrowers.
Fifty-five per cent of respondents said shifting prices put pressure on them to act quickly in purchasing.
For 69 per cent of respondents, prices have an impact on the location of purchase, and 51 per cent said competition with other home buyers put pressure on them to act.
These trends were mirrored by a recent Mortgage Choice study. Here, the fear of missing out (FOMO) was recognised as a key driver for borrower activity.
Almost a third (30 per cent) of respondents purchased their property due to FOMO.
“Stepping stone” purchasing has become a major trend for Aussie borrowers. Home buyers are viewing their first purchase as a stepping stone to get into the property market.
Forty-seven per cent of Gen Z, 54 per cent of Millennials, 47 per cent of Gen X, and 35 per cent of Baby Boomers applied this logic to their first property.
The younger demographic of borrowers is opting for strategic property investment.
Just 17 per cent of Gen Z purchased their first home as a “forever home.” This rises to 31 per cent of Millennials, 36 per cent of Gen X, and 41 per cent of Baby Boomers.
Gen Z made up the largest portion of first home buyers who purchased a “fixer-upper” (22 per cent). This dropped to 19 per cent of Millennials, 12 per cent of Gen X, and 9 per cent of Baby Boomers.
Gen Z were also the most likely to purchase an investment property as their first home, with 17 per cent of respondents opting for this option. This fell to 13 per cent of Millennials, 12 per cent of Gen X, and 11 per cent of Baby Boomers.
Property continues to be ingrained in wealth creation. Of the home owner respondents, the top reasons for purchasing another property were:
- To buy an investment property (45 per cent).
- Needing a bigger place (22 per cent).
- Wanting improved features and amenities (19 per cent).
- To live closer to the CBD (15 per cent).
- To live in a better work-from-home environment (14 per cent).
Falling interest rates and a tight rental market have boosted the attractiveness of investment properties. This is reflected through increased attention from borrowers.
“Investment properties, particularly in growth corridors and regional areas, can offer manageable entry points with the potential for rental income and capital gains. Our survey results suggest that Australians aren’t just buying homes for their lifestyle, they’re buying them for long-term financial gain,” said Mortgage Choice CEO Anthony Waldron.
Waldron said borrowers have taken a “more considered approach” to property purchases. People are more engaged with market conditions and are leveraging them to drive decisions.
[Related: FHB activity surges throughout June]
