Real Estate
3 July, 2025
‘Rentvesting’ is new reality
ONLY 55 per cent of millennials aged between 25-39 own their home, compared to 70 per cent of baby boomers at the same age in 1991 and 65 per cent of Gen X in 2006.
Ray White Group chief economist Nerida Conisbee said the dramatic shift reflected more than just affordability challenges – it represented a fundamental change in how young Australians must approach homeownership.
“The housing tenure data reveals a concerning trend: while outright ownership has remained relatively stable across generations, the proportion of young people with mortgages has declined significantly,” she said.
“More telling is the rise in rental accommodation among millennials, with over 40 per cent renting compared to around 30 per cent for previous generations at the same age. This shift indicates that many young Australians are either unable to secure mortgage finance or are choosing to delay homeownership due to market conditions.
“The traditional path of saving for a deposit while living at home, then buying in the same city where you work, has become increasingly unviable.
“In 1991, capital city homeownership was achievable for many young adults as affordable housing meant they could accumulate a deposit by the time they were ready to establish independence. Today’s market demands a completely different strategy.
“Rentvesting has emerged as the pragmatic response to this new reality. Remarkably, over 50 per cent of property investment purchases in the past year were made by millennials and Gen Z, according to Commonwealth Bank data.
“This strategy allows buyers to purchase an investment property in an affordable area while continuing to rent in their preferred location – maintaining lifestyle while building equity.
“The appeal of rentvesting extends beyond simple affordability. It offers genuine strategic advantages that traditional homeownership cannot match.
“Young professionals can live in vibrant inner-city areas with superior amenities, shorter commutes and dynamic social scenes while building wealth through property investment in growth markets.
“This approach also provides career flexibility. Rather than being anchored to one location by a mortgage, rentvestors can relocate for career opportunities while maintaining their investment portfolio.
The psychological pressure of homeownership – being responsible for every repair, rate rise and market fluctuation on your primary residence – is also reduced.
“The financial mechanics work particularly well in Australia’s current market conditions. Investment property loans, while requiring higher deposits and carrying slightly higher interest rates, offer significant tax advantages through negative gearing and depreciation benefits. These tax efficiencies can substantially improve the investment’s net return.
“With historically low vacancy rates, potential interest rate cuts and continued high population growth, Australian capital city property markets will likely remain challenging for traditional first-home buyers.
“Rentvesting provides a pathway to property ownership that acknowledges current market realities while building long-term wealth.”
