By Stephen Johnson, economics reporter for Daily Mail Australia
05:39 10 April 2024, updated 05:43 10 April 2024
Almost half of all property investors who get a loan are millennials, with landlords typically borrowing more than $500,000, the Commonwealth Bank has revealed.
Australia’s biggest home lender has revealed that Millennials, or those born between 1981 and 1996, made up 46 per cent of landlord investors in 2023.
By comparison, Gen X buyers born between 1965 and 1980 make up 37 percent of investors, while baby boomers born from 1946 to 1964 make up just 9 percent of new landlord borrowers.
Of the Millennials taking out a home loan, a third of them did it themselves.
The Commonwealth Bank’s executive general manager of home buying, Dr Michael Baumann, said younger investors were also generally choosing to rent close to the city rather than owning a far-flung suburb.
“The interesting thing is what we continue to see from many Australians is a tendency to invest in rentals, buy a property where they can afford it and then rent it out where they want to live,” he said.
“Rental investing gives Australians the chance to get on the property ladder sooner rather than later and buy a property in a lower cost area without having to give up their lifestyle used to when they hired.’
The average age of property investors is 43, with an average loan size of $528,405, which is less than the Australian average loan size of $598,624.
With a 20 percent deposit of $132,101, a mortgage of $528,405 would buy a home worth $660,506.
Banks can now only lend up to 5.2 times someone’s pre-tax salary, meaning the average investor borrowing at their maximum capacity would earn $101,616, or slightly more than the average full-time salary of 98 218 dollars.
Melbourne’s west is proving to be a hotspot for investors, with Hoppers Crossing having a more affordable median house price of $628,711, CoreLogic data shows.
Craigieburn, in Melbourne’s north, with a median house price of $686,049 was also on the list, with both suburbs significantly cheaper than the greater Melbourne median house price of $935,049.
Inner city areas are also popular, with North Melbourne having a median apartment price of $512,983, less than half the suburban median house price of $1.374 million.
In Sydney, where property is much more expensive, middle-income Millennials will have to buy with a spouse.
Haymarket, with a median apartment price of $1,077, was on the hot list, along with central Sydney, where $1.144 million is the median point for units.
In Sydney’s north-west, investors were also particularly interested in Marsden Park, where the median house price was $1.188 million, and Kellyville, where the median house price was $1.895 million.
Both suburbs sit higher than Sydney’s median house price of $1.414 million.
First home buyers
As for first home buyers, Commonwealth Bank figures also show that Millennials make up 56 per cent of first home buyers, or double the figure of 27 per cent for Gen Z buyers born after 1997.
New financial lending data released this week showed first home buyers accounted for 36.9% of new loans in February.
Loans for first home buyers rose 20.7% in a year, despite the Reserve Bank of Australia raising interest rates for the 13th time in 18 months in November, taking the rate to a 12-year high of 4. 35%.
Construction activity
Last year, Australia built 168,690 new homes, including 113,072 houses and 55,618 apartments, the Australian Bureau of Statistics revealed on Wednesday.
In the year to September, the level of net immigration to Australia rose by 548,800 as 111,000 babies were born.
The net population increase of 659,800 meant that the number of new homes built was 238,075 less than the population increase, based on Australia’s average household size of 2.5 people.
