Australia’s Rentvesting Trend Continues Amid Rising Rental Market and Housing Crisis - Property Inc

Australia’s Rentvesting Trend Continues Amid Rising Rental Market and Housing Crisis

As Australia’s property market experiences cooling and rental growth skyrockets, the concept of rentvesting remains a viable option for many Australians. Rentvesting involves renting a property in a desired location while investing in real estate elsewhere. According to Sydney-based buyers’ agent and Qualified Property Investor Adviser, Kate Hill, rentvesting is still worth considering depending on age or location (Thai, 2023).

Hill cites CoreLogic analysis, which found that the number of suburbs where it is cheaper to buy than rent has decreased over the past year. “The truth of the matter is that mortgage repayments have risen more than rents have over the past year, which has actually reduced the number of suburbs where it is cheaper to buy than rent according to the latest research,” Hill said (Thai, 2023).

In addition to the rentvesting trend, Australia faces a housing crisis exacerbated by the return of Chinese students and other factors such as high inflation, interest rates, and slowing supply (Spiro, 2023). The National Housing Finance and Investment Corporation (NHFIC) predicts a shortfall of 62,300 flats and medium-density dwellings in the next five years (Spiro, 2023).

This crisis has drawn attention to the build-to-rent (BTR) market in Australia, which is currently in its infancy with only 23,175 units nationwide (Spiro, 2023). BTR developments aim to capitalize on the shift to rented accommodation and deliver additional supply at scale. Richard Temlett, director of research and strategy at Charter Keck Cramer, says that “any increase in supply will help put downward pressure on rents” (Spiro, 2023).

Developers and investors are betting on the BTR market becoming a more widely accepted form of housing in Australia, with companies like Hines partnering with the property arm of Canada’s Ontario Teachers’ Pension Plan to develop and acquire up to US$1 billion of assets in Australia’s BTR sector (Spiro, 2023). However, addressing the housing crisis in Australia requires a critical mass of BTR projects and stronger backing from state and federal governments.

In conclusion, rentvesting remains a viable option for Australians seeking to invest in the property market, while the BTR sector offers potential solutions to the country’s housing crisis. As the market evolves, a combination of strategies and support from the government will be necessary to ensure the availability of affordable housing options for all Australians.

References:

Thai, H. (2023). Australian rental market: Is rentvesting still a good idea? Retrieved from https://thepropertytribune.com.au/market-insights/australian-rental-market-is-rentvesting-still-a-good-idea/

Spiro, N. (2023). Australia’s housing crisis and return of Chinese students a blessing and a curse for build-to-rent market. Retrieved from https://www.scmp.com/comment/opinion/article/3218973/worst-over-asias-housing-markets-mixed-signals-mean-its-hard-tell?module=perpetual_scroll_1&pgtype=article&campaign=3218973

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