Seventy-four percent of people now think rentvesting is a good strategy for those struggling to enter the property market, according to non-bank lender State Custodians Home Loans.
The survey – which polled 1,006 people nationwide – found that 33% of all respondents across all age groups say they’re in favour of rentvesting, as it allows people to build equity and live where they want instead of living in mortgaged houses in areas they’re not keen on.
Thirty-one percent of respondents say the strategy allows people to get into the property market sooner, and 29% say it’s a good way of providing investors with dual income streams: one from tenants and the other from tax benefits.
Rentvesting is particularly appealing to young adults. Twenty-five percent of Gen Y respondents (who’re struggling the most to buy homes) approve of rentvesting as it’s virtually impossible to obtain property through other means.
Gen Y respondents also say rentvesting is a great means of affording them the lifestyle they want. Around 26% of Gen Y respondents say the strategy would enable them to live in high-quality rental homes (which would be out of their price range to buy), whilst raking in income from property investments. Additionally, 32% of Gen Y respondents say it would be cheaper to rentvest than shouldering an owner-occupier mortgage, which leaves them with limited disposable income.
Joanna Pretty, general manager at State Custodians, said the question of lifestyle has become one of vital importance to young people.
“More and more young people are choosing to rent in desirable, trendy areas to be close to work, friends and amenities,” she said. “In this ‘lifestyle-focused’ era, a great rental in a fashionable area can be seen as a more desirable option than buying a place far from the action. However, while these areas provide a great lifestyle, they tend to be more expensive to both rent or buy which creates a real dilemma when it comes to saving for a home.”
State Custodians’ research also showed that both Gen Y (78%) and Gen X (75%) are more likely than older Australians (66%) to think that rentvesting in today’s property market is a great idea. While 26% of Gen Y respondents feel it’s more desirable to live in better-quality rental homes than in worse-quality mortgaged homes, only 19% of Baby Boomers feel the same way.
Pretty said these differences in sentiment reflect how much Australian society has changed. “In previous generations young couples settled down quicker and were eager to secure their first home as soon as possible, even if it was nothing [flashy.] They were more prepared to buy properties and fix them up in areas that were not on their radar simply to secure a place,” she said.
“However young people are now settling down later in life and choosing to – or [being] forced to - rent for longer periods in order to save up enough money for an initial deposit. Or else they’re taking their time to consider their next move and focusing on other things like their career or travel, so they’re entering the market later. What’s more, for many the prospect of buying a place that may require some work, given people’s busy pace of life nowadays, isn’t so appealing.”
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