First home buyers embrace rentvesting as investor home loans surge
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First home buyers are increasingly turning to ‘rentvesting’ to enter the property market, with new data showing a significant rise in investor home loans among this group.
Digital home loan lender Tiimely Home reports an 8.45% increase in first-home buyers applying for investor home loans in 2024, up from 5.87% in 2023.
This trend aligns with recent Australian Bureau of Statistics data, which revealed new housing loans to investors have increased by 575 million (5.6%) Australia-wide, 36.1% higher compared to a year ago.
Adelaide-born Karen Nguyen, who now lives in Sydney, shared her experience with rentvesting, describing it as “a home-owning strategy where you rent property right for your lifestyle, while you own an investment property right for your budget.”
Nguyen said that entering Sydney’s expensive property market “wouldn’t have been possible” without purchasing an investment property outside the major capital cities.
“With the high housing prices in Sydney, even if I were to save the deposit (which would have taken me years to save for), I would not have been able to afford the repayments due to the high interest rates,” Nguyen explained.
She purchased her first investment property in Adelaide and her second in Rockhampton, Queensland last year.
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Western Australia is leading this trend, with Tiimely Home’s data showing a 6.54% increase in first-home buyer investor loans from 2023 to 2024 (17.95% vs 24.49% in WA). South Australia follows with a 6.07% increase.
Belinda Jackson, Tiimely Home’s Head of Retail, said, “Compared to last year, there’s a clear trend that more first-time home buyers are entering the market as investors.”
Jackson added that soaring housing costs have made immediately owning and living in their dream home increasingly difficult for many first-time buyers.
Nguyen cautioned that while her property portfolio has made her feel “financially stable and free,” recent interest rate rises have been challenging, pushing her properties into negative gearing.
She advised young people to research thoroughly and consult experts to understand their borrowing power and uncover hidden costs. Nguyen also highlighted the misconception that a 20% deposit is always necessary, noting that entering the market with a lower deposit and paying Lenders Mortgage Insurance can sometimes be worthwhile.
Despite the challenges, Nguyen found it “much easier” to enter the property market as an investor compared to buying an owner-occupied property, citing lower property prices and less competition outside major city centres.
Jackson concluded by noting that the potential peak in interest rates, coupled with a record-high rental market, is driving investors into the market to secure properties.