Rents across Australia have risen sharply over recent years, with little sign of easing
Vacancy rates remain low, new construction continues to lag behind population growth and demand for quality rentals is outpacing supply in many areas.
For renters, the pressure is real. Deciding whether to buy, rentvest or stay where you are, however, isn’t a simple “yes” or “no” – it depends on your life stage, financial position and longer term goals rather than just what the market is doing right now.
When buying may suit your situation
If you have stable income, a consistent savings habit and a deposit of ideally 10% (plus a buffer for ongoing costs), buying a home may be a meaningful step.
Ownership may help you escape recurring rent increases and may provide a sense of security, stability and the potential for long term equity growth.
Ownership may be more suitable if you’re comfortable staying in the same place for several years (typically five or more), so you can see your repayments and any market changes play out over time.
Some borrowers use offset accounts to help reduce the interest they pay on their loan while keeping access to funds for emergencies or planned expenses.
When rentvesting may fit your lifestyle
Rentvesting – renting where you prefer to live while buying an investment property in an area you can afford – can be a flexible middle ground.
This approach may be relevant for some borrowers who would like to live in one location and purchase property elsewhere.
This approach can be relevant if:
- the area you prefer to live in has stretched affordability,
- you are early in your career or value mobility, and
- you are comfortable with managing both rent and an investment loan.
An investment property can have income and cost implications that should be discussed with your accountant or tax adviser.
Factors such as rental demand, costs and location may be relevant when considering an investment property, subject to independent professional advice.
When staying may be a consideration
There is no rule that says you must buy property at a certain age or income level.
If your deposit is still building, your income is variable, or rising living costs have reduced your buffer, staying in the rental market for now may be an option worth considering.
This time can be used to:
- pay down high interest or short term debts,
- grow a stronger emergency fund or deposit, and
- review your spending and refine your budget.
By strengthening your position, you can enter the property market on sounder footing when the timing and numbers are better aligned for you.
Market timing vs life timing
Attempting to ‘perfectly time’ the property market is difficult and often unsuccessful.
What may matter more is being financially prepared, regardless of whether prices are rising, falling or stable.
A time to consider buying (for your own home or an investment) may be when you can comfortably manage repayments and ongoing costs over the medium to long term.
If you’re unsure what path best fits your situation, the first step is often clarity. Understanding your realistic borrowing capacity and current financial position.
With that groundwork in place, the choice between buying, rentvesting, or staying put often becomes clearer.