Want to own property sooner? Rentvesting could be the key

Rentvesting is gaining traction among Australians looking to break into the property market in 2025.

The idea is simple: instead of buying a home in the area where you want to live, you invest in a property in a more affordable or high-growth region while continuing to rent in your preferred location. This strategy helps buyers build equity, which they can later use to purchase a home in their dream suburb.

According to Westpac’s latest Home Ownership Report, 54% of first home buyers are considering rentvesting, a 4% increase from last year.

It’s most popular in New South Wales, where 61% of buyers are exploring this approach, followed by Victoria (54%) and Queensland (52%). The trend is catching on as Australians seek ways to climb the property ladder without compromising on lifestyle.

One major factor influencing this shift is interest rates. Westpac’s Senior Economist, Matthew Hassan, pointed out that potential rate movements are shaping buyer sentiment.

Last year, high rates discouraged purchases, but now, with the possibility of lower rates on the horizon, buyers are feeling more confident. For rentvestors, this could mean increased buying power and better opportunities to enter the market.

Westpac’s Managing Director of Mortgages, Damien MacRae, also highlighted that more Australians are entering 2025 with plans to purchase a property – 13% compared to 10% last year.

He noted that 82% of Australians are open to buying in areas they hadn’t originally considered, showing just how flexible buyers are becoming to make homeownership work for them.

However, if you’re considering rentvesting, it’s essential to have clearly defined investment objectives.

Ask yourself – is this a long-term investment or a stepping stone to another property? Also, location matters – look at areas with strong capital growth and solid rental yields. Understanding the local demand for certain property types can give you an edge in making a smart purchase.

In short, rentvesting is becoming an appealing alternative for Australians who want to own property without sacrificing lifestyle choices. With market shifts making it more viable, 2025 could be the year many take the leap.