Rising property prices push more Australians to buy their first homes as investments while renting elsewhere
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Nearly 10,000 first-home buyers across Australia have purchased properties this year with no intention of living in them, according to new data highlighting a significant rise in the rentvesting trend.
The practice, which involves purchasing a home as an investment property while renting elsewhere, saw a 21.4% surge, more than double the growth rate of first-home buyer loans for owner-occupiers, which rose by 9.1%. This figure is also seven times higher than the growth in loans for non-first-home buyer owner-occupiers, which increased by just 3%.
The findings, released by Money.com.au in its latest Mortgage Insights Report, revealed 9,809 first-home buyer loans linked to rentvesting during the study period.
New South Wales reported the highest uptake of the strategy, with 9.3% of first-home buyer loans in the state used for investment purposes. NSW also experienced the fastest growth in first-home buyer investor loans nationally, increasing by 31.4%.
Mansour Soltani, property expert at Money.com.au, believes rentvesting will continue to grow in popularity, particularly in costly capital cities where affordability pressures persist.
“People just get priced out,” Soltani said. “If we look at the last 30 years, we’ve always been told there’s a big correction coming, and it never comes.”
He added that many young buyers prefer to live in rental properties in desirable locations while owning investment properties in areas with better growth or rental potential.
“I think one thing that first-home buyers need to take into consideration when they are rentvesting is that you’re looking at very different factors when making a purchase,” Soltani said. “You need to be looking at population growth, rental yield, and what you think the forecasted return is going to be in the next five years.”
The report showed rentvesting was least common in Victoria, where fewer than one in 20 first-home buyer loans were for investment purposes. The state’s property market remains dominated by owner-occupiers, with Victoria accounting for 36% of first-home buyer owner-occupier loans nationally.
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