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Melbourne first-home buyers buying up big on investor-owned units

Melbourne first-home buyers buying up big on investor-owned units

 

 

First-home buyers are swooping on units and apartments in Melbourne’s inner suburbs being sold off by investors hoping to cash out at the top of the market.

 

It comes as rental yields weaken across the city, pushing many investors to make the choice between selling up or holding on.

 

“Of our last 30 auctions, 90 per cent have been owned by investors, and more than 90 per cent have been purchased by first home-buyers,” said Luke Saville of The Agency in Hawthorn.

 

“Often, investors won’t get into the market unless there are some really good opportunities, and we haven’t seen them in the market for quite some time now. So, a lot of them are getting out of the market, thinking it’s right at the top, and this is as good a time as ever to capitalise on that.”

 

Domain data shows units reached a record high median price of $572,793 in the June quarter, which was 5.2 per cent higher than June 2020. Rents dropped by $10 over the June quarter to $365 a week – $50 lower than last year.

 

The fall in Melbourne’s rental prices is linked to the devastating economic impacts of COVID-19, which has curtailed interstate and international migration and dramatically reduced the flow of incoming overseas students.

 

Before the pandemic, most of Melbourne’s suburbs were hitting, or close to, record-high rents.

 

Property investors have enjoyed good profits for many years, but it’s now much harder to make good returns, said Andrew Salvo, Ray White Southbank principal.

 

“A lot of owners are saying it has been a great yield market for many years, and it will be again once borders open, but they’re probably not wanting to ride it out because we haven’t seen any drops in the sales market at all.

 

“So, the sales market is stronger than the rental market, and they’re looking at it as an opportunity to exit the market.”

 

First-home buyers Lizzie Wagner and Mitch op’t Hoog have just moved into a two-bedroom unit in Surrey Hills sold by an investor. The couple inspected the property on the day Melbourne’s sixth lockdown was announced and purchased it through a series of Instagram messages with the agent in the days afterwards.

Although they are thrilled with their $906,000 purchase, they know they didn’t exactly get a bargain.

 

“With the market being so hot, we know we definitely paid top dollar,” Lizzie said.

 

“But it was worth it just to be out of the race during lockdown. It was such a stressful time, and while we would have really loved to get it for about $880,00 to $890,000, we thought we just had to do it.”

 

The couple were able to save between $5000 and $10,000 extra thanks to the money they didn’t spend on travel and entertainment while in lockdown.

 

The bonus saving time has also helped other first-home buyers, along with funding from parents, said agent Matt Grima at Marshall White Port Phillip.

 

“It’s definitely the bank of mum and dad in some of the affluent areas we’re working in,” he said.

 

“A lot of people have been financially affected through COVID, and a lot of people haven’t, and those who haven’t have been able to scratch together a good deposit because they’re not spending anywhere as much money as they were on travel and luxuries such as restaurants, big parties and all of that.

 

“So they’ve actually got more funds than they might have otherwise because their living funds have been drawn down.”

 

Lending statistics from the Australian Bureau of Statistics shows first-home buyers made up 32.6 per cent of all new loan commitments to owner-occupiers in the June quarter. Nationally, lending to first-home buyers was 20.4 per cent higher than at the same time in 2020. However, they are also 6.8 per cent lower than the figures in January, which is tied to the end of the HomeBuilder incentive.

 

 

Ref: KATE JONES|NEW HOMES EDITOR, MELBOURNE  (on 16 Sep 2021). Melbourne first-home buyers buying up big on investor-owned units. Retrieved from  https://www.domain.com.au/news/melbourne-first-home-buyers-snapping-up-investor-owned-units-1088240/.

 

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