Are The Days Of Rent-vesting Over?

For more than a decade, rent-vesting has been a go-to strategy for everyday Australians looking to get a foothold in the property market. It allowed buyers - particularly first-timers -to invest in a more affordable property in a high-growth area while continuing to rent in a location that suited their lifestyle.

But in today’s evolving property landscape, it’s time to ask - is rent-vesting still the smart play it once was?

Why Rent-vesting Took Off

Rent-vesting appealed to buyers who couldn’t afford to purchase in their preferred suburb - often inner-city areas - but didn’t want to miss out on the benefits of rising property prices. By purchasing in affordable growth markets like Brisbane, Adelaide, or Perth, they could start building wealth without uprooting their lifestyle.

And for many, it worked. Rent-vesting delivered capital growth, rental income, and an earlier entry into the market than would have been possible if they waited to buy a home outright.

In fact, according to Commonwealth Bank data, in 2024 around 50% of investment purchases were made by Millennials and Gen Z buyers, many of whom were adopting this very strategy.

But the Landscape Has Changed 

While rent-vesting may have been the perfect stepping stone in the past, several key factors are shifting:

• Prices have surged in the key rent-vesting markets - Brisbane, Adelaide, and Perth - making it harder to find high-growth, value-for-money properties.
• Growth is moderating, so the upside isn’t as clear-cut as it once was.
• Government assistance has become more generous and restrictions have eased, making it more attractive - and often more financially beneficial - for buyers to purchase a home first.

The Numbers Tell the Story

Looking at a simplified example - a buyer weighing up the choice between buying a home in outer Sydney with government assistance versus buying an investment property in Brisbane and continuing to rent may find themselves up to $35,000 better off in the owner-occupier scenario.

Of course actual outcomes depend on property selection, rent levels, and capital growth potential.

A New Era for First-Time Buyers

For those just starting out, government support can make homeownership more accessible and appealing than ever - particularly now some States have relaxed legislation to allow rooms to be rented out in owner-occupied homes.

However, there's no one-size-fits-all solution. The best option will still depend on:

• Where you want to live
• What kind of property you’re buying
• Your financial and lifestyle goals

One word of caution - don’t be swayed into buying a new property just to access grants. In most cases, established properties offer better long-term value, even if they don’t come with all the government incentives.

The Outcome

So, are the days of rent-vesting over?

Not entirely - but the strategy no longer holds the clear-cut advantage it once did. With more generous assistance on offer and shifting market dynamics, purchasing a home to live in is becoming the better choice for many buyers - particularly those who qualify for today’s expanded incentives.

Get Clear on What’s Best for You

Buying your first property is a big decision, and getting it wrong can cost you time, money, and momentum. That’s why we created the “What’s Best First – Home or Investment” guide, designed to walk buyers through the six critical steps to making the right decision for your personal circumstances. Click here for a copy. 

If you want unbiased, expert help to navigate this choice, The Property Frontline is here to support you every step of the way.