While the census was unable to cover statistics on rentvesting, Westpac has taken a survey to determine who is purchasing investment properties while also living in rental accommodation. The Ipsos poll sheds light on how Australian’s are investing in property, revealing that roughly two in five Australians would consider buying a property as an investment while renting than purchasing a property as an owner occupier.
The research has shown that young Australians in particular are seeking new ways to enter the property market with Lauren Fine, Westpac head of home ownership being quoted in this Finder.com article relating to the research saying:
“The research shows that many young Australians are looking at savvy ways to get into the property market, showing that there’s still a clear aspiration for home ownership while maintaining their lifestyle,”
With 40% of Australians now open to the idea of rentvesting, how will this trend affect future movements in the property market? We are already experiencing the shifting of our suburbs as young people relocate to areas which are more affordable for them as well as investing in areas that are outside their home cities or states as identified in this Domain article on the new spots Sydneysiders are moving to. Rather than being in in areas such as the inner west, which has been typically associated with millennials and young professionals, areas on the city’s outer ring such as Parramatta now have the same proportion of around 20.2 per cent.
While rentvestors might be those creating a city of landlords, this isn’t quite the case. As discussed in this realesteate.com.au article, the majority of rentvestors are actually looking for their own house or apartment to live in as an owner occupier for the next property. This means that for most of these young people, they are not looking for a strategy to make fast money but rather they are closing the gap on the property ladder by adding the extra rung before they are able to purchase their own home.
This is most likely a direct result of the housing affordability crisis locking young people out of the market and prompting them to seek alternative ways to secure capital, purchase a property and make payments on their mortgage. Since many areas are now experiencing declining yields and record growth, it is safe to say that for the time being, investing while renting is an option that is much more approachable for those under the age of 35.
The Westpac report concluded by predicting that rentvesting will continue to grow if affordability was an issue for young Australians. This could have many flow on effects for our housing market with properties in areas that have been more affordable having an influx of sales, particularly those that are desirable for tenants such as being close to public transport and facilities whereas housing closer to the city may have a greater demand for tenants rather than owner occupiers.
- Next Generation: Young, Brave and (Financially) Free July 7, 2020
- Are You Forgetting your Child’s Future? July 7, 2020
- The Solution to the Affordability Crisis is to Change Our Attitude Towards Property July 7, 2020
- Why Keeping Australia’s Real Estate Prices Growing Could Be the Solution Rather than the Problem July 7, 2020
- Are Property Investors the Antithesis Holding First Home Buyers Back from Achieving the Australian Dream? July 7, 2020