Written

For

The

Australian

-

Window

of

opportunity

for

‘rentvestors’

to

become

‘homevestors'

Here's a question worth asking: if you've been rentvesting for the last five years, are you still doing it because it makes financial sense — or because it's become a habit?

The numbers behind rentvesting are compelling. Over the past two decades, the proportion of 25 to 35-year-olds buying investment properties has doubled, while home ownership in that age group has slumped to just one third. And the reason is obvious. In Sydney, it now takes 16 years of average income to buy the average home. In Melbourne and Brisbane, 10 years. In Hobart, eight. Compare that to the three to four years of income the baby boomers needed, and it's little wonder younger Australians are throwing up their hands and renting where they want to live while buying where they can afford.

But I think the window is starting to shift. Rents have climbed roughly 10 per cent a year for three years running, chewing through tenants' pay packets. Meanwhile, interest rates appear to have peaked, with markets pricing in three to four RBA cuts over the next 12 months — worth around $5,000 a year on the average mortgage. Renters won't see rents fall as rates come down. Homeowners will feel relief.

Here's the opportunity: many rentvestors have done well. Portfolios in Adelaide, Brisbane and Perth have delivered strong capital growth. Even after stamp duty and capital gains tax, cashing out an investment property could put a first home within reach.

And if the numbers still don't stack up, there's Australia's fifth-largest lender — the Bank of Mum and Dad — which has already tipped $64 billion into helping kids buy property. Frankly, $50,000 given today is worth far more to a 30-year-old than a $500,000 inheritance three decades from now, when they probably won't need it.

My view: rentvestors who want to become homeowners should start getting their affairs in order now.