An increasing number of investors say they're having to make sacrifices to buy property in Australia

Photo by Mark Metcalfe/Getty Images

It’s not just Australian first-time buyers who are having to sacrifice to buy a property.

According to new research from Mortgage Choice, an increasing number of prospective investors are choosing to go without life’s little luxuries in order to buy a property.

This table from the group’s latest investor survey shows the steady increase in the proportion of investors sacrificing discretionary spending levels to obtain a property.

Source: Mortgage Choice

“This is the third year in a row that we have seen a rise in the proportion of Australian investors saying they have been forced to make lifestyle sacrifices in order to buy property,” said John Flavell, CEO of Mortgage Choice.

“In 2016, 69.4% of investors said they made lifestyle sacrifices in order to afford their investment property, while in 2015, 68.1% of investors said they did the same.”

Flavell put the increase down to strong price growth in Australian property prices, not only over the past year, but also since the global financial crisis.

“The latest figures from CoreLogic show property values across the combined capitals have risen by 10.5% in the 12 months to June 2017 alone,” he said.

That national figure largely reflects strong price growth in Australia’s largest cities, Sydney and Melbourne, where the median property price has risen by more than 100% since early 2009.

These cities are also favoured locations for property investment, as seen in recent housing finance data released by the ABS.

As for the areas that prospective property investors were most willing to forego, nearly 80% said that they intend to curb day-to-day spending levels.

Source: Mortgage Choice

“Our research found that 78.1% of investors said they had to cut back on day to day spending,” Flavell said. “Meanwhile, 54% of investors said they chose not to take a holiday, while 38.7% delayed their decision to purchase a vehicle.”

There was no sub-category for spending on smashed avocado with crumbled feta on five-grain toasted bread, an item demographer Bernard Salt referred to earlier this year to explain the link between discretionary spending levels and falling home-ownership rates among first-time home buyers.

Flavell said that the data reveals that investors know that to make their property ownership goals a reality, they need to make changes to their lifestyle.

Given the scale of property price gains in recent years, at a time when wage growth remains at the lowest levels on record, it does present a challenge, especially for those who do not already own a property, be it an owner-occupier or investor.

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