As Generation Y matures to take their place in the world, we notice that they are doing things a little different when it comes to the way they live and invest in property. With previous generations, it was all about moving out of home, perhaps renting for a while to save for that deposit or perhaps even jumping straight into purchasing their own home. There is no arguing that the idea of homeownership has become more challenging in today’s environment and Generation Y has had it particularly difficult in saving up for a mortgage and purchasing in a location that fits with their lifestyle.
While they may be more likely to rent their current place of residence, they are still on the lookout for new ways to get a hold of the property ladder. In the past, property investors would have their first home and use the equity built up over the years to purchase a second property as an investment vehicle. Nowadays this not the case. Renters are making their mark in real estate by purchasing investment properties before they even have a home of their own.
This shows in the latest survey by non-bank lender State Custodians Home Loans. The article goes on to show that 25 per cent of Gen Y respondents approve of rentvesting stating that it is virtually impossible to obtain property through other means. The strategy allows younger people the affordability of the lifestyle they want and in some cases, 26 per cent of respondents stated that the strategy allows them to live in high quality rental homes while they continue to earn income on their investments. 32 per cent of Gen Y respondents had also stated that it would be cheaper to rentvest rather than having an owner occupier mortgage which would limit their disposable income.
This contrasts with older generations with 66 per cent of older Australians agreeing with the statement that rentvesting in today’s property market is a great idea compared with 78 per cent of Gen Y and 75 per cent of Gen X respondents. Similarly, 26 percent of Gen Y respondents stated they feel it would be more desirable to live in a better quality rental home rather than a worse quality mortgaged home while only 19 per cent of Baby Boomers felt the same way.
We can then see that as Gen Y start making decisions for their future such as home ownership and investments, they have a different mindset towards property than previous generations. There is no arguing that it is more difficult in today’s market than it was 30 years ago and for this reason Gen Y feel that rentvesting has more advantages than older generations and are more likely to employ the strategy to enter the property market. Gen Y also seems as a generation that prefers flexibility and settle down far later in life which is another component and benefit that rentvesting can offer.