Young renters keen to maintain certain lifestyle factors are increasingly looking to buy investment properties in more affordable suburbs and rent closer to the city.
The ‘rentvestor’ trend was identified in a white paper released by LJ Hooker as one of the key trends for under 30s in the property market.
“This buyer is currently renting and loves their lifestyle and doesn’t want to relocate from the area where they are presently living,” the report says.
“The problem is that they can’t afford to buy in this area. Rather than disrupt their current lifestyle these buyers purchase a property in a more affordable part of the city or country, and rent that property out while they remain as tenants in their current location.”
This buyer is currently renting and loves their lifestyle and doesn’t want to relocate.
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LJ Hooker national research manager Mathew Tiller says affordability and lifestyle are two big driving factors behind the trend.
“They are weighing up affordability with lifestyle choices. Lifestyle is winning out, but they still want to get into the property market,” he says.
“They want to live where they can enjoy the bars and restaurants, where their friends are.”
Lifestyle is winning out, but they still want to get into the property market.
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Tiller says underlying this is the rising cost of housing, particularly in inner-city locations where a large portion of Gen Y want to live.
“The biggest driver changing buying habits of those under 30 has been the rising cost of property. The national average loan size for a first time buyer was $326,000 as of March 2015; a growth of 14 per cent over the past 5 years and 58 per cent since 2005,” Tiller says.
“Price growth has also dramatically slowed the time it takes to save up for a deposit.”
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Recent research from realestate.com.au shows 23% or property seekers under 30 are looking for investment properties, and 16% or first home buyers are looking to buy and investment property.
Tiller says for many ‘rentvestors’ the renting is part of a broader investment strategy, and they look to purchase a property that gives them a strong return often with the potential for them to move into at a later stage.
“If they’re looking outside of capital cities then they tend to go for houses or townhouses. Otherwise a unit within a capital city can hit their budget and investment strategy,” Tiller says.
“They may be looking to move to the area as they get older or it may simply be an investment.”
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