Young homebuyers are overtaking Boomers as property investors, new research suggests.
The latest ‘Your Mortgage Home Loan Hindsight’ report found that Gen Z, born between 1997 and 2012, were most likely to report their recent home loan was an investment loan (17 per cent), edging out Boomers (14 per cent).
Just over half (54 per cent) of Gen Z borrowers taking out an investment loan reported owning one property only, however, compared with 7 per cent of the baby boomers.
The finding points to the emergence of 'rentvesting' as a strategy for young people to get a foothold in the housing market. Rentvestors buy more affordable properties as investments while paying to rent their home in an area they'd prefer to live but can't afford to buy into.
Another related strategy is 'nestvesting', a term coined in the report referring to people who purchase an investment property while continuing to live at home.
The report suggests that the results potentially illustrate a shift in generational interest in leveraging real estate as the financial tool, with Gen Z having the potential to emerge as the next landlord generation.
While the data highlights innovative approaches amongst younger borrowers, it also reflects the challenges they face, with affordability constraints and stagnant wages making traditional home ownership feel unattainable for many.
Instead, younger generations are re-evaluating the role of housing in achieving financial independence. Rising property prices and limited supply may further submit this shift, as younger borrowers opt for investment-first strategies.
The report suggests that some Gen Z home loan holders have increased their work hours to better their financial position, while others reported renting out a room in their house for extra cash. Millennials were more likely to cut back on discretionary and essential spending, regularly skip meals, or sell assets in order to own their home.