New Commonwealth Bank data shows ‘rentvest’ trend on the rise for home buyers

As explosive house price growth continues to burn through Australia’s major cities, a shrewd new trend is taking hold that allows home buyers to get their foot on the property ladder without sacrificing an up-market lifestyle.

Called ‘Rentvesting’, it’s the strategy to buy a property in a comparatively affordable suburb but then live in a rental in a more desirable area.

According to Dr Michael Baumann, executive general manager of home buying at Commonwealth Bank, more and more Australians are pursuing the ploy, with a surprising group becoming the most active on the scene.

“Interestingly, what we continue to see from many Aussies is the inclination to ‘rentvest’, buying property where they can afford and then renting where they wish to live,” he said.

“Rentvesting gives Australians the chance to get their foot on the property ladder sooner rather than later and purchase a property in a lower cost area without having to give up the lifestyle they have become accustomed to when renting.”

Data from CommBank, Australia’s largest bank, also shows Millennials are now the most “active” generation in buying investment properties, with 46 per cent of the bank’s new property investors in 2023 made up of Australians born between 1981 and 1996.

Gen X, or those born between 1965 and 1980, accounted for 37 per cent of all new investment property purchases.

The average age of a property investor was 43 years and the average loan size was just over $500,000, the bank’s data shows.

Dr Baumann said a “significant portion” of Millennial investors were also buying properties on their own.

“We can see that almost one third of all millennial property investors actually purchased their investment property on their own,” he said.

The top postcodes for new property investment purchases in 2023 were 2000, which is the Sydney CBD including Haymarket, 3029, which takes in West Melbourne including Hoppers Crossing, 2765, which is North West Sydney including Marsden Park, 3064, which encompasses North Melbourne including Craigieburn and 2155, which takes in North West Sydney including Kellyville.