Rentvesting Set to Become Default Strategy

Rentvesting sees significant growth as property affordability challenges persist

Recent data shows a substantial rise in "rentvesting" among first home buyers, as Australians seek creative solutions to enter the property market while maintaining their desired lifestyle. This investment strategy—where buyers purchase property in growth markets while continuing to rent where they prefer to live—has seen a 21.4 percent increase, growing at more than twice the rate of owner-occupier loans, which increased by just 9.1 percent.

A 2025 Westpac Home Ownership Report further confirms this trend, revealing that 54 percent of first home buyers are now considering rentvesting, marking a 4 percent increase from 2024. The research, which surveyed 2,000 Australians, found that NSW leads the trend with 61 percent of respondents considering rentvesting, followed by Victoria (54 percent) and Queensland (52 percent).

Strategic investment over emotional buying

Rentvesting has gained popularity because it allows Australians to maintain the lifestyle they want; often close to work, cafes, and social hubs, while still getting a foot on the property ladder. It's a strategy that focuses on buying with numbers rather than emotions.

With rising property prices in major cities, many are finding it financially smarter to rent in desirable areas and invest in high-growth locations elsewhere. It's about being strategic, not emotional, when building long-term wealth.

Westpac notes increased buyer optimism

Damien MacRae, Westpac's managing director of mortgages, highlighted that first home buyers are increasingly willing to purchase in alternative markets, with 82 percent of Australians now open to buying in areas they hadn't originally considered.

The Westpac survey also found that 13 percent of respondents plan to purchase a new home to live in by the end of the year, up from 10 percent in 2024. "More Australians are entering 2025 planning to purchase a property than last year, reflecting renewed optimism from aspiring home buyers," MacRae noted.

Interest rates and future trends

A Westpac economist pointed to potential interest rate movements as a key factor driving buyer behavior in 2025. Last year high rates deterred buyers, but the possibility rates will move lower appears to be shaping would-be buyer plans. For rentvestors the potential rate moves bode well for increased buying power.

Rentvesting will soon become the "default strategy" for investors. With affordability becoming more of a challenge and borrowing capacity under pressure, I believe rentvesting will become the default strategy for many aspiring investors.

As people become more financially educated and less emotionally driven about home ownership, they'll realise it's not about owning the roof over your head, it's about owning the right assets that can fund your future. Rentvesting is scalable, and once people see the numbers work, it becomes a no-brainer especially for young Australians.

Tips for successful rentvesting

For those considering this approach, we suggest selecting properties where rental yield offsets a large portion of the holding costs. We recommends focusing on areas with tight vacancy rates, population growth, infrastructure investment, job creation, and limited housing supply.

It's all about understanding the numbers, and not just relying on capital growth," he emphasized, while warning against investing in "shiny new apartments in oversupplied markets.

We suggest established homes in growth corridors with long-term potential, noting that professional guidance is often essential for successful investment decisions.

CoreLogic's recent survey of real estate agents further confirms that increasing interest in rentvesting among first home buyers is directly tied to ongoing affordability challenges in Australia's property market.

This information has been prepared by PHA Financial Services and does not take into account your objectives, financial situation or needs. Before acting on this information you should consider whether it is appropriate to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. The information provided was accurate at the time of publication and changes in circumstances after a document is published may impact on the accuracy of information. Some information may have been collated from various third parties and we make no assertion that the information was originally ours.