June 28, 2017
Rentvesting continues to be very popular with Australians, new data has revealed.
According to Mortgage Choice's annual Investor Survey, 27.6% of property investors purchased an investment property before they bought an owner-occupied dwelling.
Interestingly however, the proportion of investors choosing to rentvest has fallen in recent years.
In 2015, 37.1% of investors purchased an investment property before an owner-occupied home and, in 2016, 36.1% of borrowers bought an investment property first.
“In recent months, a lot of Australia's lenders have made adjustments to their investment policy and pricing, which has made it harder for some borrowers to secure this type of finance,” Mortgage Choice chief executive officer John Flavell said.
“Australians are becoming increasingly concerned that they won't be approved for an investment loan and, as such, are choosing to bide their time and put their property investment plans on the back-burner.
“As a result, it is little wonder why we have seen such a drop off in the proportion of borrowers choosing to purchase an investment property before an owner-occupied home.”
But while there has been a drop off in the proportion of Australians choosing to ‘rentvest', Mr Flavell said the fact that 1 in 4 investors purchased their investment property before an owner-occupied dwelling was still significant.
“Over the past few years, ‘rentvesting' has secured itself a place in the Australian lexicon,” he said.
“Australians are, largely, very financially savvy. They understand how lucrative property investment can be and, as such, they have embraced concepts like rentvesting.
“They know they cannot always afford to buy their dream home in their desired area, so they are happy to look for other ways to get themselves onto the property ladder.
“And, when you consider how much property prices have risen across the different markets in recent years, it can make sense for some borrowers to look at buying an investment property before an owner-occupied home.
“Rentvesting gives Australians the opportunity to buy where they can afford and still live where they want.”
While there has been a drop in the overall proportion of Australians choosing to rentvest, Mr Flavell said Australians shouldn't be deterred from investing in property.
“Even though we have seen a lot of changes in the investment lending space in recent months, with many of Australia's lenders tweaking their investment lending pricing and policy, there is still plenty of opportunity for Australians wishing to invest in property,” he said.
“At the end of the day, if Australians wish to invest in property, then the best thing they can do is take the time to speak with a mortgage professional. They will be able to help borrowers identify which lenders are happy and willing to approve their application for finance.”