According to a study conducted by digital bank Ubank, a significant shift is happening in the Australian housing market as young renters consider buying homes instead. This phenomenon, dubbed “rentvesting,” has emerged due to the rising cost of rent, which is steadily approaching the cost of mortgage repayments.
Ubank’s comprehensive research was carried out by the leading fintech consultancy, Cotality. The finding showed that if current rent trends continue, by 2025 the monthly cost of renting could equate to the monthly repayments for a mortgage. This emerging scenario creates a window of opportunity for younger Australians to step onto the property ladder.
The term “rentvesting” describes renters who choose to buy investment properties while continuing to live and rent in areas they prefer, bypassing the traditional pathway to homeownership. This strategy lets young Australians gain a foothold in the property market without compromising their lifestyle or location preferences.
Domain reports that rentvesting “can be a prudent financial move, especially for those who wish to live in areas they can’t afford to buy in.”
This shift seems to be driven by technology. Technology-driven platforms and digital-focused banking services, like those offered by Ubank, are streamlining the mortgage application process. These innovations are simplifying access to home loans for those previously alienated from home ownership due to a complex and intimidating process.
In conclusion, the rise of rentvesting is reshaping the housing market, creating new opportunities for young Australians to own property. As rent prices continue to soar, it presents an increasingly comparable cost to mortgage repayments. Coupled with technological advancements that make acquiring home loans simpler, the traditional path to home ownership appears to be morphing into a more accessible and flexible journey.
