The survey uses the “Median Multiple” (median house price divided by median annual gross pre-tax household income) to assess housing affordability.
Any city with a ratio of greater than 5.1 was considered severely unaffordable.
This has prompted some to consider whether renting a property is their only option to get onto the property ladder.
What is Rentvesting?
Rentvesting is when an aspirational property owner purchases a property, within their budget, to rent out and then rents a property where they would prefer to live.
For example, let's imagine a young couple with two children wants to purchase a three-bedroom home close to the beach on the Gold Coast.
The sales prices in these suburbs means that unfortunately these properties are not affordable.
A rentvesting solution would be to rent a property in the area where the couple want to live, and purchase an affordable investment property in a suburb with good growth drivers.
The property the couple buys can then be rented out to help cover their own rental payments and later sold for a capital gain.
This has allowed many Australians to maintain the lifestyle they want to live now, whilst also building a property investment portfolio for the future.
With any financial decision, it’s important to discuss your financial profile with your financial institution or mortgage broker, so you get a complete understanding of how much you can afford to borrow and repay and get a finance solution for your individual circumstances and goals.