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Strong capital city price growth, a more mobile workforce and the preference for lifestyle over location is helping drive the evolution of an emerging property investment trend, according to a leading real estate group.
In 2013, LJ Hooker claimed to identify an emerging trend in the market – ‘rentvesting’.
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According to the group, a rentvestor™ is someone currently living as a tenant in a rented property, who also is a landlord of a property that they own and rent out.
Mathew Tiller, head of research at LJ Hooker, said the trend has evolved as an investment strategy to encompass a broader geographic and demographic make-up driven by strong capital city growth, a more mobile workforce and the preference for lifestyle over location.
“Interestingly, when LJ Hooker first identified the rentvestor trend, we described it as a young couple in their late 20s or early 30s who love their lifestyle and don’t want to relocate from where they were renting. However, our latest research shows that there are now two clear types of rentvestors,” he said.
“The first category being those who are driven by lifestyle choices and affordability constraints, and the second category who are driven by work, study or other personal circumstances.
“There has been an evolution of the rentvestor not only by age bracket, but also income.”
LJ Hooker’s research found that 56 per cent of rentvestors are now aged between 35 and 55 years, and 38 per cent have a household income less than $100,000 per annum, while 43 percent have become rentvestors due to work or study.
“Contrary to common perceptions that a rentvestor is a young professional or university student, our survey found that a diverse age group rentvest,” Mr Tiller said.
“Rentvesting has fast become a common part of the Australian real estate market.”
Mr Tiller said the past year has seen rental growth remain soft in most capital cities, making renting a more attractive and affordable option, and potentially making rentvesting a more budget-friendly investment strategy.
“The recent strong price growth seen in Sydney and Melbourne has brought with it affordability constraints for those currently renting in the inner city and wanting to buy in the same location, and in turn pushed them towards becoming a rentvestor,” he said.
“Also, the increasing mobility of our workforce will also see rentvestor numbers rise. For example, as the mining and resource sectors slow, this workforce will move to other parts of the country and into different industries as opportunities present themselves. They will initially rent in the new locations and continue to hold either a family home or investment property in another part of the state or country.”
