Rise in first-home ‘rentvestors’ as Aussies take alternate path to homeownership

By Jack Dona · · 3 min read
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A first home investor speaks with a real estate agent about the details of a residential investment property

More and more Australians are turning away from traditional pathways to homeownership in favour of ‘rentvesting’ – buying an investment property as their first home purchase, whilst continuing to rent.  

Mozo finance expert Rachel Wastell says interest rates and house prices are to blame.

"High [interest] rates and skyrocketing property prices mean first home buyers are finding homeownership increasingly out of reach, and so many are turning to rentvesting as an alternative,” said Wastell. 

Mozo’s analysis of the latest Australian Bureau of Statistics (ABS) Lending Indicators reveals the number of first home buyers opting for investment home loans grew by 25% over the past five years. 

“Since the ABS started tracking first home investor data in 2019, there’s been a significant shift in the number of Aussies choosing to invest in their first property, rather than live in it,” said Wastell. 

According to the ABS, first-home investors represented just 5.54% of the first-home buyer market in 2019. In 2024, first-home rentvestors now account for 6.85% of the total first-home buyer market.

In the first half of this year, 4,188 Australians chose to invest in rather than live in their first home. 

“Owner-occupiers still comprise more than 93% of the first home buyer market, so it must be noted that investors are a comparably tiny cohort,” says Wastell. 

“But as buying a home where you want to live becomes increasingly unaffordable, investing is rising in popularity.”

New South Wales, Queensland, and South Australia typically house the most prolific rentvestors in the country, while Northern Territory first home buyers have picked up an appetite over the last 12 months.

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“The data highlights a growing trend among first home buyers to invest as a strategy to enter the market, amidst high property prices and borrowing costs,” said Wastell.

“Looking at the data state by state you can see that first-time investors are likely looking at where they can secure a good rental yield and which areas have rising property prices to try and increase their equity.”

Higher interest rates and loan sizes present a challenge for first-home investors

Without access to home loan grants and schemes, which are typically reserved for owner-occupiers, would-be investors need to thoroughly investigate whether this option is the right move for them – especially in our high interest rate environment. 

The average investment home loan interest rate in the Mozo database is 7.47% p.a., while the average first home buyer offer for owner occupiers is 6.44% p.a.†, at the time of writing. 

Based on a $500k home loan, first-home investors could pay about $328 more each month in repayments than owner-occupiers. 

Type of First Home Buyer
Average Rate (p.a.)
Monthly repayment (10% Deposit)
Owner Occupier (First Home Buyer Offers)
6.44%
$3,357
Investor
7.47%
$3,685
Difference
-1.01%
-$328
†Source: Mozo. Rate averages and repayments based on a $500,000 loan paying principal and interest at 90% LVR over a 25-year loan term.

“If you are opting to invest for your first property, just be aware investment loans typically come with higher rates, and the special first home buyer offers from banks are typically only available to owner-occupiers,” adds Wastell.

“Investment properties can be challenging, so you also need to consider whether your potential returns will  justify your out-of-pocket expenses and the increased risk of negative cash flow.”

For first-home buyers who aren’t looking to invest for their first purchase, there are currently 12 special first-home buyer loans in the Mozo database. Or, take a look at your options for investment loans below. 

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Last updated 22 November 2024 Important disclosures and comparison rate warning*

Investment property loan comparisons on Mozo

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  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Fixed Home Loan

    • LVR<90%
    • Investment
    • Principal & Interest
    Interest rate
    5.89 % p.a.
    Fixed 3 years
    Comparison rate
    6.74 % p.a.
    Initial monthly repayment
    $2,962
    Go to site

    Enjoy the investor benefits of a fixed loan term for 3 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.

  • Fixed Home Loan

    • LVR<90%
    • Investment
    • Principal & Interest
    Interest rate
    5.89 % p.a.
    Fixed 3 years
    Comparison rate
    6.74 % p.a.
    Initial monthly repayment
    $2,962
    Go to site

    Enjoy the investor benefits of a fixed loan term for 3 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.

  • Unloan Variable

    • Investment
    • LVR <80%
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,092
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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