Why Millennials and Gen X are the top investors
According to new data from CommBank, 46 per cent of the bank’s new property investors in 2023 were made up of millennials (born 1981 – 1996), followed by Gen X (born 1965 – 1980) who accounted for 37 per cent of all new investment property purchases throughout the calendar year.
The data also revealed almost one third of all millennial property investors actually purchased their investment property on their own.
Nationally, the average age of property investors was 43 years, and the average loan size was just over $500,000.
Over the past year, data from the Australian Bureau of Statistics found investors were the key driver of new lending, with lending growth to this segment reaching 18.5 per cent.
Meanwhile, lending to first home buyers rose by 13.2 per cent, while owner-occupiers saw a 3.4 per cent increase in lending.
The rise of the ‘rentvestor’
A ‘rentvester’ is when you rent a property in an area or suburb you want to live but can’t afford to buy in, and owns an investment property in another more affordable area.
In some cases, the younger person is able to live in the family home for reduced rent, and the rental income helps them save for their home.
This style of investing gives people the opportunity to get their foot on the property ladder sooner without having to comprise on the lifestyle they have when renting.
What ‘rentvestors’ need to think about
Pros of rentvesting
- You’re on the property ladder and have an asset.
- The chances are you probably require a smaller deposit because you’re buying a cheaper property.
- It can bolster a person’s borrowing power; lenders may consider the rent a property is expected to bring in as available income
- You’re now reaping the rewards of investment property such as earning an income and/or receiving tax deductible benefits.
- You still have the freedom and flexibility to quickly change your living location for relatively less cost or hassle.
- Later down the track, the investment property may be used as leverage to buy another property.
- You have the choice of where to invest instead of having to factor in proximity to your children’s schools, work or lifestyle choices when buying a home.
There are of course some downsides to rent-vesting which need considering. These include:
- You may not be eligible for some of the first-time home buyer incentives because you aren’t immediately living in the property.
- No matter how good a tenant you are, there is always the risk of eviction from your current property should the landlord decide to sell.
- All the usual risks of investment property ownership need to be considered such as planning for unexpected vacancy and budgeting for other costs such as landlord insurance.
We always recommend you speak to a financial specialist to find out what works best for your situation and you fully understand the risks involved.
As one of Newcastle’s longest established real estate offices we have helped hundreds of property investors realise their dreams for nearly 50 years.
Call us on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or pop into our Cardiff office for a chat to see how our property management services can help.
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