Nearly 10,000 people across Australia who have taken out first homebuyer (FHB) loans this year with no intention to live in them amid a growing but necessary trend to get their foot in the door.
New data has shown a 21.4 per cent rise in ‘rentvesting’: first home buyers taking out loans for their first residence, then renting out their new houses and units.
This trend has grown two times faster than FHB loans for owner occupiers, at 9.1 per cent.
The growth is also seven times faster than loans for non-FHB owner occupier homes, which sit at 3 per cent.
The average annual loan size for first home buyers across the nation increased to $525,643, compared to the average loan size for non-first home buyers at $598,000.
This followed a 1.6 per cent increase in the loan size in the September 2024 quarter, and a 6.4 per cent annual increase.
Rentvesting involves renting a home in a preferred location while purchasing an investment property in a more affordable area. It’s a way to start building wealth without compromising on lifestyle.
A few reasons this may be worth considering include:
1. Affordability: Buying in inner-city Melbourne can be out of reach for many. Rentvesting enables buyers to purchase in more affordable suburbs while enjoying city living as renters.
2. Lifestyle Flexibility: It offers the opportunity to live close to work, cultural hubs, or the beach without the burden of a massive mortgage commitment.
3. Investment Growth: Purchasing in growth areas allows investors to benefit from long-term capital gains and rental returns.
4. Tax Benefits: Investment properties may offer tax deductions, including depreciation and interest expenses.
So, could rentvesting be the right strategy for you? Let’s chat! We can assist by guiding clients through investment loan options and helping assess the best path forward. It could be a step towards making your property goals a reality.