Many households have opted to rent over buying a property in the last two years and that is primarily due to affordability, investor demand, and new supply. Over the past twelve to eighteen months, housing affordability has deteriorated, making it far more expensive to buy right now. Thus, it makes renting much more attractive.
More investors have been entering the property market with interest rates at an all-time low. It has allowed many more new apartment developments to commence. However, rental vacancy rates are expected to rise, while rental growth will remain flat. There’s an increase in the number of investors entering the market, providing greater choice for tenants.
Since there is more new supply entering the market, more lifestyle opportunities for renters have come about to suit those looking to live close to work, retail, restaurants, and schools, particularly in suburbs closer to the city. With that, 2017 is expected to be a good year to become a Rentvestor especially if housing is pricing you out of buying a home to live in.
Are millennials leading the rentvesting trend?
Rentvesting seems to be the new Australian dream. It involves buying an investment property, while renting and living in a trendier urban suburb, for wealth building in a more affordable but less desirable area. It’s how millennials are trying to solve the tension between consumption-driven and brand-defined lifestyles along with their desire to start climbing up the property ladder.
The lifestyle offerings of the middle belt of Brisbane, for example, will continue to increase their appeal as trendy millennials age and their priorities shift towards those of young families. Rentvesting offers millennials the flexibility to live and to move based on support networks, employment or convenience.
Why choose rentvesting?
Research shows that there are two types of Rentvestor. These two types of Rentvestor are:
According to the same research, 43% of Rentvestors become a Rentvestor due to work or study and this group owns an investment property with a considerable distance from where they are currently renting and residing.
The research shows that 38% of this group own a property in another state while 20% own a property more than a hundred kilometres away from where they live, but within the same state. Rentvestors who purchased an investment property closer to where they are renting have done it as an investment strategy.
The number of Rentvestors is more likely to grow.
While strong price growth especially in the city and popular areas means people are less likely to afford to buy where they want to live, rent increases remain manageable. The increasing mobility of the workforce will also see the number of Rentvestors rise.
Rentvestors can take advantage of more affordable property prices in Brisbane as well as better growth which the city is expected to see over the next few years instead of buying a property in your home state, where prices could be going through the roof such as in Sydney. This allows you to continue renting in an area you want to live in while getting a foothold in the property market.
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