Rentvesting has been gaining a lot of traction in the media in recent months, particularly as affordability worsens in the capital cities and the percentage of homeowners under 40 sinking lower each year. With all the media attention, rentvesting has drawn mixed opinions from Australians from all demographics, income levels and industries. Some would argue that the strategy is instrumental in combating the rising affordability crisis, providing young people with a chance to own property while keeping their living expenses low and taking advantage of the tax incentives for investors. Others may argue that the rentvesting strategy will only worsen the housing affordability crisis and lead to a city of landlords, preventing the next generation from making their move on the property market. In this article, we will take a look at these differing opinions and offer some insight into what rentvesting means for Australians today.
A recent article in the Australian Property Institute magazine discussed the idea that rentvesting was a viable solution to the affordability crisis. The article explores how rentvesting allows young people to not only adopt an investment strategy allowing them to achieve success in wealth creation through property but also the fact that it allows people to be able to live where they want and stay connected with friends and loved ones. The decision to rent where you live and have property investments in well researched areas means that rentvestors are able to find solace in the fact they are capitalising on their lifestyle without sacrificing their future financial security.
This also means they are able to get their foot on the property ladder far sooner than others who may be faced with the decision to change jobs or endure a long commute, say goodbye to family and friends and also have capital tied up in a mortgage on their home.
On the opposite end of the spectrum, an article by domain discussed the fact that while rentvesting is a viable solution for young people today but it is likely that future generations would not be able to take advantage of this strategy as we move towards a city of landlords effectively “kicking the can further down the road.” First Home Buyers Australia co-found Daniel Cohen expressed concerns that this would put further pressure on property prices in our more affordable areas.
However, buyers agency Pete Wargent stated that this isn’t necessarily a bad thing with further casualisation of jobs and a rapidly changing workforce, homeownership is slowly becoming less desirable as later generations prefer flexibility and freedom of movement.
While it is no question that rentvesting will have an effect on our property market as the trend continues to grow, we do know for certain that the market conditions have undergone a shift unprecedented in earlier decades and this calls for a change in the way we view property. If younger generations are faced with further pressure on the property market with a greater number of investors, we are likely to be faced with a further shift in the way we live and new opportunities will be created as we reevaluate the way we live, work and invest in our cities of the future.