Who doesn’t love free money?
Well, according to some articles that have been appearing over the past few years, first home owners are beginning to shy away from government grants that are available if you buy into new properties. Figures confirm this, as lending numbers to first home owners in NSW are currently at their lowest point since February 1992. The government is scratching their heads wondering why these younger generations are rejecting this free money. In NSW first home buyers get $15,000 and no stamp duty on a new property; this is not a small amount of money. One simple reason for the rejection is that the younger, more mobile generation finds property prices too expensive in the areas they want to live, and as a consequence are looking for other ways to get their foot on the property ladder.
Unlike others of their generation, the more determined buyers don’t complain about the unfairness of being able to buy an average priced property two kilometres from the CBD, close to restaurants, beaches and bars. Instead, they are taking advantage of the grants to their benefit. First home buyers are now buying new properties as investments and renting where they want to live. New properties offer the positives of strong cash flows, tax benefits and low maintenance costs. Living in the property for 6 months in the first year of ownership ensures the purchaser is eligible for the grant, which then gives them the capacity to rent the property out for however long they wish.
The rent vs buy strategy is currently one of the best strategies being utilised by first home buyers and established property owners for buying property. Combining government grants, lower interest rates and the strong demand for rental accommodation in our cities, many first home owners are able to purchase a neutrally geared property, reduce their tax and live where they want to, all for the same cost of purchasing a property to live in.
To get more info on the Rent vs Buy strategy check out this short video!