rent versus buy
A few months ago I wrote an article for the Financial Review Smart Investor discussing whether it was better for wealth creation if one was to rent and buy investment properties or purchase an owner occupied premises then later on purchase an investment. I concluded it was better to consider renting then buying investment properties.
I read in a Terry Ryder report that over 20% of first-home buyers are electing to buy an investment property as their first property purchase, according to a September 2014 survey conducted by Mortgage Choice. This tends to confirm earlier research from National Australia Bank, which indicated a significant portion of first-time buyers were opting for an investment property as their first purchase. Mortgage Choice chief executive Michael 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. We just need to delve into the numbers a bit more before we start to impose any regulatory slowdown in investor lending.”