First Home, Forever Investment: A Strategy for First Time Buyers

First Home, Forever Investment: A Strategy for First Time Buyers


With house prices escalating and wage growth slow to follow, young people can find themselves priced out of popular markets. In today’s blog, C&G explore a strategy that can help to get you on the property ladder without a 6-figure price tag.


In days gone by, a first home was usually purchased by a young couple planning to start a family. The home may have had two or three bedrooms, and it would be where the couple could settle happily for years to come. They might outgrow their home and upsize to a bigger residence – or they may have stayed put until retirement.


With Melbourne’s median house price now perched above the $900,000 mark, the dream of a first home that is centrally located and which features three or four bedrooms becomes less realistic for many. Some would-be first-time buyers are turning their attention to rentvesting, which involves buying a property as an investment and continuing to lease. While this enables young people to retain their lifestyle and proximity to work while investing in affordable areas, it exempts them from first home buyer incentives and owner-occupier mortgage rates. This means no stamp duty exemption and considerably higher interest rates – not to mention the responsibility of being a landlord and costs associated with leasing such as insurance and maintenance expenses.


What first time buyers can choose to do, however, is to buy a quality investment-grade property and live in it themselves. For example, a well-chosen one or two-bedroom apartment in the Bayside region might cost somewhere in the region of $400,000 - $600,000, with repayments on an 80-90% mortgage falling not too far short of what may have been paid in rent.


While these smaller homes may not suit young buyers for years to come, they do provide an exit from the rental market, getting them onto the property ladder sooner. Ideally, they’ll purchase the same type of property that they would otherwise be renting, paying their own mortgage rather than that of an investor. Providing the repayments are below 36% of their income, there may still be capacity for saving towards an eventual upsize. When the time comes to move on, the property can be sold, rented out or used to leverage another home loan on a bigger property.


If you’re a first-time buyer considering opting for an apartment rather than a forever home, Chisholm & Gamon may be able to assist your entry to the Bayside market. Get in touch with our friendly team to discuss your goals, or browse our available properties here.


03 9531 1245
90 Ormond Road,
Elwood Vic 3184
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3 Bluff Road,
Black Rock Vic 3193
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1/103D Bay Street,
Port Melbourne Vic 3207
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7A Bay Road
Mount Martha 3934
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