With first-home buyer loans rising 5.9% in 2024 and projected to grow another 6.5% in 2025, more Australians are adopting flexible strategies - like rentvesting - to overcome affordability challenges and secure a foothold in the market.
Rentvesting - where buyers rent where they want to live and purchase an investment property elsewhere - is gaining traction amid fierce competition in entry-level markets.
“The market has long been challenging for first-home buyers, but I’ve never seen it this difficult,” said Specialist Finance Group general manager Blake Buchanan (pictured left), whose organisation supports over 1,000 brokers handling 40,000 transactions annually.
“The biggest issue is supply,” Buchanan said. “Combine that with inflated building costs, high interest rates, seasoned investors and cashed-up downsizers, the entry-level market becomes fiercely competitive – and often out of reach.
“Conditions are tough for buyers right now. That may shift slightly with new government policy, but for now, it’s the reality for many buyers.”
Adeal Rizvi (pictured right), director of Ariza Buyers Agency, said he has worked with dozens of first-home buyers who’ve opted for rentvesting to maintain their lifestyle while building wealth.
“In places like Sydney, people are often paying $800 to $900 a week in rent because they want to stay in their preferred suburbs,” Rizvi said. “But buying a comparable property in those areas would mean repayments of $1,700 a week or more, which is simply unaffordable. So, instead of compromising on location, they choose to rent where they want to live and buy an investment property elsewhere.”
He said the approach allows first-home buyers to get on the property ladder while remaining financially flexible.
“Many of our clients understand that buying an apartment in Sydney may offer rental income but limited capital growth,” Rizvi said. “In contrast, purchasing a house in a regional or interstate market can deliver stronger growth.”
The Australian Bureau of Statistics reported 8,283 new home loan commitments by first-home buyers for investment purposes in 2024 - a 12% increase on 2023. By comparison, owner-occupier loan commitments from first-home buyers rose only 5% over the same period.
Access to smarter property data is also playing a role in the shift, Rizvi said.
“First-home buyers today have more information at their fingertips than ever before,” he said. “They know which areas offer strong rental demand and capital growth, even if they are outside their own city. It’s no longer a guessing game.”
Rizvi added that for many, rentvesting is now seen as a proactive financial decision.
“First-home buyers are starting to see property not just as a place to live, but as a way to build long-term wealth,” he said.
