The ‘live now, pay layer’ mentality often associated with Generation Y is being defied, according to the Mortgage Choice 2013 First Time Property Investors Survey.
The findings indicate younger generation Australians are shaping up to be savvy investors who are aware of the benefits of buying into the property market and are often willing to give up aspects of their lifestyle to fund their purchase.
Of the more than 1,000 Australians surveyed who were planning to buy their first investment property in the next two years, Gen Y made up more than one third (34%) of the respondents. Furthermore, for two fifths of these Gen Y respondents, an investment property will be their first ever property purchase.
Mortgage Choice head of corporate affairs, Belinda Williamson, says Gen Y’s appear to be financially switched-on and focusing on property investment.
“Forty per cent of the respondents in this age bracket [were] willing to forgo any available First Home Owner Grant on their first property purchase in favour of buying an investment property as opposed to a home. Meanwhile, the other 60% of the Gen Y respondents already own their first or subsequent home and are now branching out to make an investment property purchase.”
With financial security high on their agenda, Gen Y’s were motivated to purchase their first investment property by the need to set themselves up financially for the future (75% of Gen Y’s), followed by the perception that there is more benefit in investments such as property, than there is in the share market (47%) and rounding out the top three was the notion of planning for their retirement (43%).
“This younger generation of investors is looking for financial freedom and they see more profit in bricks and mortar investments,” says Williamson.
The greatest challenge for Gen Y first time investors, as indicated by the survey results, is saving a deposit (42%), followed by finding the right investment property (29%) and choosing their investment strategy (15%).
“Our survey shows 75% of Gen Y first time investors were choosing to make lifestyle sacrifices to help them achieve their property goals. The top five lifestyle sacrifices included cutting back on general day to day spending, eating out less and limiting take-away food, missing out on a holiday, delaying a vehicle purchase and last but not least, cutting back on alcohol related expenses.”
Williamson says it’s encouraging to see Gen Y bucking the stereotype of being ‘reckless’ with their money, proving to the generations ahead of them that they are more astute when it comes to investment decisions than given credit for.
“It shows that age doesn’t matter when it comes to building an investment property portfolio. A sound investment strategy should set anyone up for success, regardless of their life stage.”