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More first home buyers are turning to ‘rentvesting’ to get onto the property ladder, with members of industry suggesting this will only gain in popularity.
An increasing number of first home buyers are considering investment properties over owner-occupied homes as their entry point into the property market, according to industry players.
The concept of ‘rentvesting’ – buying in one location and renting in another – is growing in popularity as prospective home buyers face soaring property prices and an average 10.6-year wait to save for a deposit.
For example, in 2024, the Australian Bureau of Statistics (ABS) recorded 8,282 new home loan commitments by first home buyers for investment purposes, 12 per cent higher than in 2023.
By comparison, owner-occupier first home buyer loan commitments grew just 5 per cent over the same period.
In the March 2025 quarter, around $955 million of first home buyer investor loans were settled – more than the $659 million settled in the March 2020 quarter – when rates were at emergency low levels of 0.10 per cent.
More recently, Westpac research found more than half (54 per cent) of first home buyers were considering ‘rent-vesting’ to get into the property market, up 4 per cent in 2024.
According to Westpac’s annual Home Ownership Report, released in March 2025, NSW dominates as the rentvesting capital of Australia, with 61 per cent considering rentvesting in the state, followed by Victoria at 54 per cent, and Queensland at 52 per cent. This is potentially as rents are typically higher in these capitals.
Speaking earlier this year, Damien MacRae, Westpac’s managing director of mortgages, said: “Our research shows that 82 per cent of Australians would be open to purchasing in an area they hadn’t originally considered, as buyers adjust their expectations in response to the market.”
Westpac’s senior economist Matthew Hassan said that the rate-reducing cycle would be a strong motivator for would-be buyers this year.
“Interest rates are almost certainly having an influence here. Last year, high rates deterred buyers, but the possibility rates will move lower appears to be shaping would-be buyer plans. For rent-vestors the potential rate moves bode well for increased buying power,” Hassan said.
Blake Buchanan, general manager at aggregation group Specialist Finance Group (SFG), said the trend reflected the changing economic and housing landscape.
“The market has long been challenging for first home buyers, but I’ve never seen it this difficult,” Buchanan said.
“The biggest issue is supply. Combine that with inflated building costs, high interest rates, seasoned investors and cashed-up downsizers, the entry-level market becomes fiercely competitive – and often out of reach.”
Looking ahead, he said: “Conditions are tough for buyers right now. That may shift slightly with new government policy, but for now, it’s the reality for many buyers.”
Adeal Rizvi, a director at buyer’s agent Ariza Buyers Agency, said he had noticed the same shift and had helped dozens of clients who chose rentvesting over buying a home to live in.
“In places like Sydney, people are often paying $800 to $900 a week in rent because they want to stay in their preferred suburbs,” he said.
“But buying a comparable property in those areas would mean repayments of $1,700 a week or more, which is simply unaffordable. So, instead of compromising on location, they choose to rent where they want to live and buy an investment property elsewhere.”
According to Rizvi, the strategy allows first home buyers to maintain their lifestyle while strategically building wealth through property.
“Many of our clients understand that buying an apartment in Sydney may offer rental income but limited capital growth. In contrast, purchasing a house in a regional or interstate market can deliver stronger growth,” he said.
Rizvi said that access to better data was also shaping decisions.
“First home buyers today have more information at their fingertips than ever before. They know which areas offer strong rental demand and capital growth, even if they are outside their own city. It’s no longer a guessing game,” Rizvi said.
“First home buyers are starting to see property not just as a place to live, but as a way to build long-term wealth.”
Rentvesting as an alternative for FHBs
Eventus Financial mortgage broker Alex Veljancevski has extensive experience working with first home buyers and in March told The Adviser that despite interest rates easing, first home buyers still face substantial challenges.
He said that lower rates could push prices even higher, as more buyers with increased borrowing power compete for limited stock.
To navigate affordability challenges, Veljancevski said he sometimes encourages first home buyers to consider alternatives like rentvesting or the use of government initiatives like the Home Guarantee Scheme to enter the property market.
[Related: Housing crisis deepens amid affordability woes and supply shortfall]
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