The break-neck pace of the housing market in major cities like Sydney has in recent times created a peculiar type of buyer – parents looking to buy in investment property specifically for their young children. Is it as crazy as it seems and should people take the plunge?
When you ask any young kid what their ideal present would be, they immediately besiege you with the usual list of items – Lego, My Little Pony, Transformers, toy cars, dolls, CDs, etc, etc, etc.
We’re pretty sure no child ever replied, “What I really want is my own apartment which one day in the future, I can either live in or sell off!”
And yet that’s exactly what some forward-thinking parents are doing nowadays – snapping up investment properties now for their little ones so they get a foothold into the market. Just consider these examples:
Whilst these stories may sound a bit out there, in reality people have been investing for years to financially set up their families, but just haven’t specified the reason at the time or had no solid plan upon purchase.
Many people receive some kind of monetary contribution from their parents towards a home deposit and sometimes that’s funded from the sale of an investment property owned by the family.
A recent Galaxy Research survey of 1,005 people nationwide for State Custodians found that 64 per cent of respondents were keen on buying an investment property. However an equally large 65 per cent of those surveyed also added that they were nervous about the prospect given the current economic climate.
Some 35 per cent of people feel it’s too hard to come up with enough money for a deposit, 33 per cent say they’re worried about taking on too much debt, and 23 per cent say it’s too expensive to find an appropriate investment property in the city they live in.
“Is it understandable that people are nervous about investing in property at the moment considering growth in wages has not kept pace with rising dwelling prices and cost-of-living,” says State Custodians general manager Joanna Pretty.
“Many Australians [59 per cent of respondents] also believe foreign investor activity has been the main culprit for escalating house prices. People may be wanting to see if prices slow down.”
“Despite this, an investment property remains a favourable investment choice in many areas as long as you do your homework. It’s actually quite a good way for people to give their child a headstart in life later on. For many property investing has delivered solid returns over a sustained period of time.”
The research also revealed that the vast majority of Millenials aged 18-24 are already looking towards the future with a huge 81 per cent saying they’d like to own an investment property at some point, feeling it was the best way to create wealth.
Therefore, with competition for investment units increasing all the time, the fact is, if you have the equity or savings, now might actually be a good time to invest for your family’s future.
Joanna says the key to success with any investment strategy is knowledge. “Start researching the property market movements so you can begin to identify areas that might provide great investment returns,” she suggests. “Talk to a buyer’s agent or other real estate experts about areas you’re interested in, and visit an accountant or financial planner to help you work out whether investing in property is best for your situation.
“It's a tough market in many parts of the country at the moment, but remember, persistence is the key.”
See if you qualify. To get a more accurate idea of how much you can borrow with State Custodians,