Revealed: Aus trend helping buyers beat record house prices
Anant Shah, a 34-year-old father of two, and his wife Sweta, are among thousands of Aussies turning to rentvesting as prices rise – a way to benefit from better value and strong capital gains elsewhere while remaining where you want to live.
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Mortgage data shows investor lending is now outstripping the rise in owner-occupier loans, doubling in the last four years alone. Queensland saw investor loans rise 24 per cent rise in the last year with two in every five new loans in the state now going to landlords.
For the Shahs, buying where they live in a rental in Brisbane's Chapel Hill was out of the question – with median prices there surging 85.2 per cent during the pandemic to $1.565m now.
'The budget to buy in the suburb I am renting in is huge because Chapel Hill is near the city. Houses here are like around $1.5m. That's why we shifted our focus to buy an investment property where it fits our budget and still rent here where we want to stay.'
'If you want to grow your money and portfolio, you have to do some investment. You can buy a $1.5m house as owner-occupier but it would make it very difficult to buy an investment property after that for a while because of the mortgage.'
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He said they picked Ipswich for their first investment because it still gave them the option to move there if it ever became necessary.
'We were also not too sure about this investment plan as a whole so we wanted to buy something nearby. This is about 20 minutes drive from where I'm living. Also if we had to change our plans or something happens, we could easily try to move there and still be close to work.'
The strategy has done so well for them they now also have an investment property in New South Wales.
Future Strategy managing director Gareth Croy said 'rentvesting' was not a new trend in places like Sydney where people had to service massive mortgages to stay in their own home.
But, he added, that same reasoning of massive mortgages due to record prices was now seeing the trend rapidly gain popularity in once affordable areas like Brisbane.
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'Rentvesting is definitely here to stay,' he said, to the point where it was even making financial sense for first home buyers.
'It makes sense for young people to get onto the property ladder even if they can't afford to buy where they want to live.'
This is seeing a growing number of young first home buyers choosing to miss out on state FHB grants to just get their foot in the door as investors.
Mr Croy, who has offices on the Gold Coast, in Sydney and Melbourne, has now opened a multidisciplinary financial services office at Eagle Street with 30 staff to cope with demand.
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