Are rentvestors the future of Sydney's property market?
Thu March 16, 2017
There's no denying the fact that housing affordability is a major issue in Sydney. The market's rapid growth over the last few years has meant price increases across the board, making it harder than ever for new buyers to take their first steps onto the property ladder. While these price increases can be seen throughout the city, the most-affected areas have been the more desirable suburbs. This makes perfect sense, as more demand will always push the price up, but it becomes a problem when people have to choose between living where they can't afford to buy and buying where they don't want to live.
It's certainly a thorny problem, and one that is slowly being tackled by new apartment developments and changes to public transport infrastructure. In the meantime, many people have tried to find their own solution, resulting in an entirely new breed of buyer - the rentvestor.
Rentvestors place a lot of emphasis on lifestyle, prioritising different ideals to other age brackets.
Making a rentvestor
The term 'rentvestor' seems to have come out of nowhere, and indeed this group of buyers have appeared only recently, as a result of the market's unique conditions. Rentvestors reflect a few different facets of Sydney life, in addition to the issue of affordability. First of all, as a relatively young demographic, many rentvestors place a lot of emphasis on lifestyle, prioritising different ideals to other age brackets. This could be a suburb with lots of restaurants, bars and entertainment venues or a close proximity to public transport and the CBD.
Rentvestors are also a reflection of the change in social values surrounding home ownership. For previous generations, there was a lot of emphasis placed on owning your own home, but this is starting to change as the rental market continues to grow.
As a result of all of these different factors - affordability, prioritising lifestyle, and new social values - rentvestors have emerged. They still want to get into the property game, but don't want to give up an inner-city lifestyle. As their name suggests, the solution is to rent where they want to live, and buy an investment property wherever they can afford to.
Benefits of becoming a rentvestor
Rentvestors are becoming more and more common across Australia, but Sydney in particular is a great market for them. There's so much going on in the city, and so many different opportunities, that house prices shouldn't be a barrier to living here. At the same time, young investors keen on property should still be able to buy, and rentvesting makes this possible.
There are a few different options for rentvestors in terms of where to buy property, with many looking at the outer suburbs where prices are lower and there's less competition. However, there are some who are looking even further afield in other states, with Queensland being a popular choice for Sydney-dwellers looking for an investment property.
One benefit to rentvesting is that each purchase comes with less 'non-negotiables.'
The first big benefit to taking a rentvest approach is that it's possible to get into the market sooner. This is because cheaper properties require smaller deposits. For Sydney and its rising prices, this means more of a chance to enjoy capital gains further down the road.
Another benefit to rentvesting is that each purchase comes with less 'non-negotiables.' For example, if you're buying a house to live in, you'll be more concerned with specific issues such as floor plan, bedroom size and proximity to certain amenities. For an investment, this isn't such a big deal, meaning that there are more options out there as a potential investment. It's also possible to look at investing in more than one property, increasing cash flow from tenants and making it possible to continue moving up the property ladder.
For more information on the changing face of property in Sydney, contact Laing+Simmons today.