How The Next Generation Can Beat the Odds and Afford Their Dream Home
For many Australian parents, the dream of seeing their children own a home feels increasingly out of reach. Housing prices have risen faster than wages for years, while the cost of living continues to squeeze household budgets. The old pattern of mum and dad helping with a deposit, followed by the purchase of a first home in a familiar suburb, is becoming less realistic for today’s generation.
Yet, there are smarter, more flexible pathways to home ownership emerging. One of the most practical strategies for young Australians today is rentvesting, which involves renting where you want to live while investing in a property somewhere more affordable. This approach allows young people to start building wealth earlier, rather than waiting years to save for their dream home.
Why the traditional route no longer works
Australian property values have surged dramatically in recent years. CoreLogic data shows national dwelling values have risen by nearly 39 percent over the five years to March 2025, adding hundreds of thousands of dollars to the cost of an average home. At the same time, ANZ and CoreLogic reported that the median dwelling value across the country was around $807,000, with median weekly rents at about $642 in late 2024. These figures highlight the widening gap between income growth and housing costs.
For an average-income household, saving a 20 percent deposit for a median-priced home now takes more than six years, according to various analyses cited in property market reports. That timeframe is daunting for young Australians trying to balance rent, bills, and lifestyle needs. Many simply cannot afford to buy in the suburbs where they grew up or near their workplaces.
The rise of rentvesting
Rentvesting has become an increasingly popular alternative. It allows young people to rent in a location that suits their lifestyle and career while purchasing an investment property in a more affordable area.
In early 2025, Westpac research revealed that more than half of first home buyers were open to, or already pursuing, rentvesting as their first step onto the property ladder. The idea is simple: buy where you can afford, not necessarily where you want to live. The rental income and potential capital growth from that property can then become the stepping stone toward owning a dream home in the future.
The key benefits of rentvesting for young Australians
Rentvesting offers a number of clear financial and lifestyle advantages.
1. Build equity sooner
By purchasing an investment property early, young buyers begin building equity immediately. Even modest capital growth and loan repayments can help accumulate significant wealth over time.
2. Maintain lifestyle and career flexibility
Renting where you want to live allows you to stay close to work, friends, and amenities, without compromising lifestyle choices. You are not tied to a single location just because you own property there.
3. Leverage your borrowing capacity
Investment loans allow borrowers to use leverage to enter the market earlier. With careful budgeting and risk management, young investors can benefit from property appreciation sooner rather than later.
4. Access tax advantages
Investment properties often come with deductible expenses such as loan interest and maintenance costs. These benefits can make property investment more affordable when managed responsibly and with professional advice.
5. Strengthen credit history
Successfully managing an investment loan and property improves financial discipline and builds a positive credit record, which can help secure future loans for a dream home purchase.
How to make rentvesting work in practice
For parents guiding their children or young adults starting their journey, rentvesting is most effective when approached strategically.
• Start small and realistic. Choose a modest, affordable property in an area with strong rental demand and long-term growth prospects. The goal is to enter the market and begin building equity, not to buy your dream home right away.
• Do your numbers carefully. Analyse the cash flow, including rental income, mortgage repayments, maintenance costs, and potential vacancies. Always plan for rising interest rates and unexpected expenses.
• Research growth areas. Look for suburbs with infrastructure development, population growth, and proximity to transport or employment hubs. These are the ingredients of long-term capital appreciation.
• Maintain financial buffers. Keep an emergency fund for repairs or rental vacancies. A solid financial cushion prevents you from being forced to sell during market downturns.
• Seek professional advice. Work with qualified mortgage brokers, accountants, and property managers. They can help optimise loan structures and tax efficiency, ensuring the investment is set up for success.
From rentvesting to owning a dream home
Rentvesting should be viewed as a multi-stage journey toward home ownership, not the final destination.
Stage 1: Rent in the area where you want to live while purchasing a well-chosen investment property elsewhere. Focus on building equity and learning the fundamentals of property management and finance.
Stage 2: Over the next five to ten years, use rental income, capital gains, and refinancing options to build equity. Many investors use that equity as a deposit for their next purchase.
Stage 3: Once your investment base is strong and your finances are stable, you can transition to buying your dream home. Some sell their investment property to fund the deposit, while others convert an existing investment into an owner-occupied home if it suits their lifestyle.
This approach allows flexibility and gives young Australians time to establish their careers and financial foundations before committing to a long-term residence.
The role of government schemes and incentives
In 2025, several government initiatives were available to help first-time buyers, such as the First Home Guarantee and state-based deposit schemes that allow eligible participants to buy with as little as a 5 percent deposit. These programs can shorten the path to ownership but often come with property price caps and eligibility restrictions. Young buyers should always review these details carefully before applying.
While these schemes are helpful, they should be viewed as supplements rather than complete solutions. The broader strategy of rentvesting remains a sustainable, independent way to build wealth and achieve eventual home ownership.
How parents can support their children’s property journey
Many parents are eager to help their children buy a home but may not be in a position to gift large sums of money. Fortunately, there are other ways to contribute meaningfully.
• Educate and empower. Help your children understand budgeting, loan structures, and the long-term commitment of property ownership. Financial literacy is the strongest foundation you can give them.
• Offer guarantor support responsibly. Acting as a guarantor on a child’s first property loan can reduce their deposit requirement, but it should be done only with legal advice and clear financial boundaries.
• Encourage disciplined saving. Set goals, match savings contributions, and celebrate milestones along the way. Building good habits early pays off in the long run.
• Promote long-term thinking. Reinforce the idea that the first property does not have to be the forever home. A small, smart investment today can grow into the deposit for their dream home tomorrow.
The bigger picture: affordability and opportunity
Rising rents have also added pressure on young Australians. Over the past decade, median advertised rents have surged across capital cities, driven by limited supply and strong migration. However, this rental growth also makes property investment attractive for those who can afford to buy, as it generates steady income and capital appreciation over time.
For many young Australians, rentvesting represents a balanced middle ground between financial prudence and lifestyle freedom. It offers a way to participate in the property market without sacrificing the flexibility that is so important in early adulthood.
Final thoughts
The dream of owning a home in Australia is not lost, but it does require a new mindset. The traditional path of saving for years and buying a home in your ideal suburb may not suit the realities of today’s housing market.
Rentvesting allows young people to take control of their financial future by entering the market sooner, leveraging property growth, and maintaining the lifestyle they value. Over time, this approach can lead to the stability and pride of owning that long-envisioned dream home.
For parents, the most valuable support may not be financial at all. It lies in sharing knowledge, teaching discipline, and encouraging smart decision-making. With the right strategy, patience, and informed guidance, the next generation of Australians can still turn the dream of home ownership into a reality.
