Most people do not realise it, but most homebuyers these days share three things in common—most are in their 30s, have savings and a high paying job. With the high property prices in Australia these days, it comes as no surprise that only few can actually afford a house. Many consider the idea only when they have enough money saved and a job to sustain their savings, which usually happens later in life.
The latest trend in property investment, however, breaks the long-held notions of home buying. Millennials are not only buying homes earlier on; many are making money out of leasing these properties as well. They are maximising home ownership by turning it from an expense to investment.
Introducing Rentvesting
Companies like VisionOneProjects.com.au note that most people turn to property development for financial gains. In fact, a study suggests that young homebuyers nowadays are into rentvesting or buying where affordable and renting where they want to live.
Recent findings from Mortgage Choice reveal that the number of first-time homeowners who were also investors doubled in more than three years. Home ownership rose by 10-22% in 2011-2014 for young buyers. Moreover, approximately 48.4% of those first-time homebuyers were born after 1980.
Contributing factors
Researchers cite affordability as the underlying cause of the increasing number of rentvestors. Most of them want to maintain their lives in the city even if they can’t afford to buy homes. This is why they rent in places they want to reside in and buy properties far from the city for investment purposes.
The affordability of property ownership is more evident due to easy lending requirements. Most rentvestors borrow money from banks since they cannot afford to buy property in one payment. With interest rates becoming more achievable, young people have more chances to buy a home early.
Lending institutions spur the rentvesting trend as well. Australia’s big banks still issue property loans to property investors despite new limits set by banking regulators. Among the institutions are National Australia Bank and Macquarie, which increased their investor lending by 14% and 82% respectively.
These trends imply that people do not have to be older, have much savings, or a high salary to buy a home. With strategies like rentvesting, owning a home becomes an expense with greater returns.
