Young Investors

Young investors: achieving property ownership





Property prices in Melbourne have come off the boil somewhat this year. Yet the market still presents a challenging landscape for first home buyers, who continue to seek alternative methods of achieving the great Australian dream of home ownership.

The statistics

Compared to 30 years ago, there are now twice as many Australians renting, and for many Generation Ys now in their 20s and 30s, buying their own home in their ideal location may still feel like a distant possibility. 

Not helping the cause are recent REIV figures, which indicate median sale  prices for houses in the Melbourne metro area remained above $800,000 during the June 2018 quarter, while median unit sale prices sat above $600,000 for the same period. 

Although these figures may be confronting for some, they don't preclude younger generations from becoming savvy property investors. Investing in bricks and mortar can be an excellent stepping stone to financially stability and eventually owning your dream home. 

The rise of rentvesting

For the many professionals who work in, or close to, the CBD, high property prices can be a barrier to purchasing a property to live in.

Undeterred, many switched-on buyers are instead choosing to 'rentvest' as an alternative. Rentvesting is the practice of buying a property in an area you don't necessarily want to live in, then renting that property out while you continue to rent a home in your preferred location - which for many younger buyers is an amenity-rich suburb close to the city.

Rentvesting can enable first home buyers to enter the property market at a lower entry price, without having to compromise on lifestyle and convenience. 

While unconventional, a recent Mortgage Choice survey highlights the popularity of rentvesting, with at least a third of surveyed investors identified as first-time buyers who had not yet bought their own home.

This statistic is even less surprising when you consider current house prices. Median prices in desirable locations including Banyule remain well out of reach for many first home buyers - median house prices in Ivanhoe and Ivanhoe East were recorded as $1.675M and $2.0525M respectively for the June 2018 quarter. 

Significant tax benefits, reduced moving costs and the prospect of a considerable return in the future only add weight to rentvesting soon becoming the norm among first time and young home owners.


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