Ray White Group Chief Economist, Nerida Conisbee, has highlighted the big change in homeownership, with only 55 per cent of millennials aged 25-39 owning their home compared to 70 per cent of baby boomers at the same age in 1991.
“This dramatic shift reflects more than just affordability challenges – it represents a fundamental change in how young Australians must approach homeownership,” Ms Conisbee said.
“The traditional path of saving for a deposit while living at home, then buying in the same city where you work, has become increasingly unviable.”
Ms Conisbee said that rentvesting, which is purchasing an investment property in an affordable area while continuing to rent in a preferred location, has emerged as a smart response to current market conditions.
“Remarkably, over 50 per cent of property investment purchases in the past year were made by millennials and Gen Z, according to Commonwealth Bank data,” she said.
The appeal of rentvesting extends beyond affordability, offering other advantages that traditional homeownership cannot match.
Young professionals can maintain lifestyle benefits while building equity through property investment.
“This approach also provides career flexibility,” Ms Conisbee said.
Rather than being anchored to one location by a mortgage, rentvestors can relocate for career opportunities while maintaining their investment portfolio.”
According to Ms Conisbee, successful rentvesting requires choosing between a capital gains strategy or high rental yield strategy.
“The capital gains strategy focuses on suburbs showing potential for significant capital appreciation,” she said.
Current market data supports this approach, with Perth dominating the top-performing affordable suburbs for price growth.
“Areas like Middle Swan-Herne Hill have recorded impressive gains of over $20,000 in three months alone, representing a growth rate of 3 per cent,” Ms Conisbee said.
The alternative high-yield approach prioritises immediate cash flow, targeting suburbs where rental returns are substantial.
“The current market data reveals some exceptional opportunities, with Mallacoota in East Gippsland Victoria leading the nation with a remarkable 21.9 per cent rental yield,” she said.
“More sustainable high-yield opportunities appear in regional centres like Coolgardie in Western Australia with 14.2 per cent yield and Port Pirie in South Australia with 10.6 per cent yield.”
Ms Conisbee said that rentvesting carries some risks that require careful management, including vacancy periods, property management responsibilities, and market volatility.
“Capital gains tax implications also require consideration. Investment properties don’t qualify for the principal residence exemption, meaning profits are subject to capital gains tax upon sale,” she said.
“The emotional challenge of being a landlord while remaining a tenant shouldn’t be underestimated.
“Dealing with difficult tenants, maintenance issues, and vacancy periods while paying rent elsewhere requires both financial buffer and psychological resilience.”
Looking ahead, Ms Conisbee believes rentvesting will continue to gain traction in Australia’s property market.
“With historically low vacancy rates, potential interest rate cuts, and continued high population growth, Australian capital city property markets will likely remain challenging for traditional first-home buyers,” she said.
“Rentvesting provides a pathway to property ownership that acknowledges current market realities while building long-term wealth.”
