For many young Australians, breaking into the property market in 2025 feels harder than ever. With median house prices in Sydney and Melbourne sitting well above $1 million, saving a 20% deposit while paying rent can feel like an uphill struggle. It’s no surprise then that rentvesting is moving from niche strategy to mainstream trend.

In fact, according to Westpac’s 2025 Home Ownership Report, 54% of first home buyers are now considering rentvesting as a way to enter the property market — up 4% from 2024. In NSW, that number jumps to 61%.

Rentvesting is now becoming a deliberate property strategy, rather than a workaround.

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What is Rentvesting?

Rentvesting is when you:

• Rent a home in a location that suits your lifestyle (close to work, friends, local amenities)
• Purchase an investment property in a more affordable suburb or regional area.

Instead of waiting years to afford your “dream suburb”, you enter the property market sooner — starting to build equity and gaining exposure to capital growth.

In today’s Australian property market, that early entry can make a significant difference over time.

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Why Rentvesting Is Growing in Popularity

1. Earlier Entry into the Property Market

One of the biggest advantages of rentvesting is speed. Buying in a more affordable area often means:

• A smaller deposit
• Lower purchase price
• Greater borrowing capacity flexibility

For many first home buyers, it can mean entering the market years earlier than if they waited to buy in their preferred suburb.

And in property, time in the market matters.

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2. Lifestyle Flexibility

Rentvesting allows you to live where you want — inner city, beachside, close to work — without being financially locked into that postcode.

You’re investing strategically, while maintaining the lifestyle that suits your stage of life.

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3. Capital Growth Potential

Investment properties in high-growth corridors or emerging regional markets can deliver strong long-term capital growth.

If selected well, your investment property may appreciate in value while tenants help cover the mortgage — allowing you to build equity faster than waiting on the sidelines.

That equity can later be leveraged to:

• Upgrade to a larger home
• Build a property portfolio
• Strengthen your long-term wealth strategy

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4. Tax Benefits for Investment Properties

Rentvesting can also offer tax advantages.

Investment property owners may be able to claim deductions on:

• Interest repayments
• Property management fees
• Maintenance expenses
• Depreciation on eligible new assets

Important: If you purchase a second-hand property after 1 July 2017, you generally cannot claim depreciation on previously installed depreciating assets. Only newly purchased assets may be claimable. Always seek professional tax advice before acting.

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The Downsides of Rentvesting

While rentvesting can be a great strategy, it’s not without trade-offs.

Missing Out on First Home Owner Incentives

In most cases, rentvestors are not eligible for:

• First Home Owner Grants
• Stamp duty concessions
• Other owner-occupier incentives

These schemes typically require you to live in the property. For some first home buyers, this could be a deal breaker.

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Ongoing Rent Payments

You’ll still be paying rent where you live, while also covering costs associated with your investment property.

This can impact cash flow and borrowing capacity,  particularly if interest rates rise.

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Investment Risks & Costs

Like any investment property, there are additional expenses to factor in:

• Maintenance and repairs
• Property management fees
• Insurance
• Vacancy periods

You need a clear plan of how to cover these.

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Emotional Considerations

For some, renting can feel temporary. There’s no immediate sense of “this is mine”.

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Is Rentvesting Worth It in 2026?

For many young Australians, rentvesting is the most realistic pathway into the property market.

Yes, you may miss out on certain First Home Owner incentives.
But gaining earlier exposure to capital growth and building equity sooner can, in many cases, outweigh those initial benefits.

Before making any decision, it’s important to understand:

• How will rentvesting affect your borrowing capacity
• Whether you’ll qualify for investment lending
• The tax implications
• Your long-term property strategy=

Our experienced Lending Advisers at Indigo Finance can help you assess whether rentvesting aligns with your goals and financial position.

This information is general in nature and does not constitute financial or tax advice. Always seek personalised advice before making property or investment decisions.