Surprise generation dominating property investment, and Australia’s hottest markets

Backed financially and advised by their parents, Millennials have emerged as the most prominent demographic segment when it comes to property investment.

Analysis released by CommBank on Wednesday (10 April) suggests the typical Australian investment property buyer is aged 43, gets a loan for just over half a million dollars, has backing from the Bank of Mum and Dad and is buying in central or inner Sydney or Melbourne.

Among all property investment purchases nationally, the top postcodes in 2023 were 2000 (Sydney CBD, including Haymarket); 3029 (West Melbourne, including Hoppers Crossing); 2765 (North West Sydney, including Marsden Park), 3064 (North Melbourne, including Craigieburn), and 2155 (North West Sydney, including Kellyville).

Over the past year, data from the Australian Bureau of Statistics found investors were the key driver of new lending, with lending growth to this segment reaching 18.5 per cent.

Meanwhile, lending to first home buyers rose by 13.2 per cent, while owner-occupiers saw a 3.4 per cent increase in lending.

Commonwealth Bank’s Executive General Manager Home Buying, Dr Michael Baumann said many buyers were opting to rentvest.

“Interestingly, what we continue to see from many Aussies is the inclination to buy property where they can afford and then rent where they wish to live,” Dr Baumann said.

“Rentvesting gives Australians the chance to get their foot on the property ladder sooner rather than later and purchase a property in a lower cost area without having to give up the lifestyle they have become accustomed to when renting.”

According to the CommBank data, 46 per cent of the bank’s new property investors in 2023 were made up of millennials (born 1981 – 1996), followed by Gen X (1965 – 1980) who accounted for 37 per cent of all new investment property purchases throughout the calendar year.

Only a third of all millennial property investors purchased their investment property on their own.

The younger cohort of property buyers – Millennials and Gen Z (born 1997 – 2012) – were also turning to their parents for financial advice as well as financial and mortgage security support.

The No Place Like Home report prepared by Great Southern Bank found Millennials and Gen Z overwhelmingly relied on family (43 per cent and 38 per cent respectively) and friends (31 per cent and 29 per cent) for financial advice during the past year.

Fewer than one in five had consulted qualified professionals like a financial adviser, accountant, mortgage broker or bank in the past year.

Great Southern Bank found it was around a third of young property buyers who needed parental financial support to buy their first home, which was about half that of young investment property buyers in the CommBank study.

Almost all Millennials (96 per cent) feel they could have done things differently when it comes to their finances, including:

• 72 per cent wish they had made more regular contributions to savings over time
• 69 per cent wish they had set up savings habits when they were still at school
• 41 per cent wish they had obtained independent financial advice before major decisions
• 59 per cent wish they’d researched more before purchasing an investment property
• Two-thirds wish they’d not splashed as much cash on entertainment.

Brisbane has hottest auction market

Over the March quarter, Greater Brisbane has staked its claim as the hottest auction market in the country.

The quarterly Apollo Auctions Market Report, released Wednesday, showed Greater Brisbane was the standout region with its average auction clearance rate over the three months just shy of 75 per cent – up nearly 10 percentage points since the last quarter of 2023.

That compares to wider Queensland’s current auction clearance rate of 50 per cent. South Australia has the highest current state clearance rate, at 71 per cent.

Justin Nickerson, Director, Apollo Auctions, said the first quarter of this year was a mixed bag, with some cities taking off like a rocket such as Greater Brisbane, while others were taking some time to heat up after the holidays.

“Within Greater Brisbane, Logan City is in hot demand from buyers, too, with the top average auction clearance rate of 78.5 per cent recorded over the period with its affordability attracting plenty of homebuyers and investors.”

Mr Nickerson said the housing supply and demand imbalance is continuing to impact markets around the nation, which is pushing prices higher at auction as more and more buyers compete for a limited number of properties.

“This state of play shows no signs of improving given the hundreds of thousands of new migrants calling our country home at the same time as building approvals and completions hitting record lows.

“With the minutes from the latest Reserve Bank meeting also devoid of any mention of further interest rate hikes, then this year is shaping up to be a stellar one for auctions nationwide.”