Rentvesting FHBs on the rise, says buyer's agent

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The number of first home buyers ‘rentvesting’ their way into the property market is escalating, according to an online buyer’s agency.

Since 2014, the number of first home owners who are buying through property agency iBuyNew to invest has increased by 188%. iBuyNew CEO Mark Mendel toldAustralian Broker first home buyers are increasingly looking to buy in suburbs in greater Western Sydney or interstate while they rent in inner Sydney.

“[First home buyers] are typically looking outside of where they would ideally like to live. They are looking to buy a two bedroom apartment in Penrith or Liverpool or Campbelltown, or they are looking interstate in Melbourne or Brisbane,” Mendel told Your Investment Property’s sister publication, Australian Broker.

When asked whether the most recent cash rate cut to 1.5% – which saw auction clearance rates to hit their highest level in a year over the weekend – would make it more difficult to first home buyers, Mendel said it is unlikely to have much of an effect on this segment of the market.

“I don’t think the recent reduction in interest rates has had too much of an effect on the property market because we are already at record lows. We are not jumping from 5% down to 1.5%... The reason for high auction rate clearance is because there is probably a lack of stock on the market at the moment when it comes to established homes. While the clearance rate was high, the number of properties going to auction was relatively low,” he said.

Mendel said the biggest barrier for first home buyers is saving for a deposit.

“In terms of first home buyers entering the market, their biggest issue is a deposit. It is cheaper to purchase a property today and pay a mortgage than it is to rent a property but many first home buyers haven’t had the opportunity to save a 10% deposit. That’s really the only thing stopping them from making the purchase,” he told Australian Broker.

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