Rent-vesting could be key to the market for first home buyers: Colliers International

Rent-vesting could be key to the market for first home buyers: Colliers International
Staff reporterDecember 17, 2020

First home buyers in Sydney can look to ‘rent-vest’ as a way to enter the market, while buying conditions are better than ever, says Colliers International. 

‘Rent-vesting’ refers to the concept of buying a property as an investment in an area which is affordable and experiencing significant boom conditions, while choosing to rent in a preferred, more expensive area. 

According to Colliers International, while many Sydney first home buyers choose to buy in expensive, popular areas such as the Eastern suburbs and Lower North Shore, inner west areas such as St George, Canterbury, Bankstown and Gladesville, have seen a significant price drop and are experiencing booming conditions. 

“The St George Canterbury and Bankstown areas currently offer some of the highest rental returns in Sydney and at the moment there is a lot of choice in these areas,” said Peter Kerras, Director, Residential at Colliers International.  

“First home buyers seeking capital growth should be looking in these areas to bag a bargain not compete with other buyers to pay a premium with the prospect of modest growth.

“With rent returns now higher than interest rates in some areas, it has never been a better time to buy an investment property and the strategy of ‘rent-vesting’ – buying in a more affordable area with great returns and stay renting where you know - can be a great way for young people to enter the market.”

Currently, the price difference between a new property and an older property has never been less.

“Traditionally you would be paying 20% more for a new property as opposed to second hand property, however the unsure lending environment has brought down the price of new property in certain areas, which is great news for investors,” Kerras said.

“There is a lot of misconception and fear around buying off the plan; however, many of these are unfounded. New properties have much better noise insulation, sound proofing, fire safety, plumbing and wiring and the latest modcons.”

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