Key takeaways:
More Australians are exploring rentvesting as affordability pressures make buying in their preferred suburb harder.
Proposed changes to negative gearing and CGT are prompting some investors to reassess whether new builds or established properties make more financial sense.
Lower entry prices and comparatively stronger rental yields are continuing to attract buyers to markets like WA and SA.
Experts say rentvesting decisions should still be weighed against borrowing power, cash flow and long-term financial goals, not just tax settings.
Broker conversations can help borrowers compare different pathways, including buying now versus waiting or investing interstate versus locally.
A growing number of Australians are separating where they live from where they buy property as higher borrowing costs and proposed tax changes reshape housing decisions.
Rather than waiting years to buy where they want to live, some Australians are buying investment properties in lower-priced markets while continuing to rent in their preferred suburb.
The strategy, commonly known as rentvesting, is becoming a more common consideration for some buyers navigating rising housing costs and changing market conditions.
While rentvesting is not new, proposed changes to negative gearing and capital gains tax (CGT) appear to be prompting more discussion around the strategy.
Westpac’s 2025 Home Ownership Report found 54% of first-home buyers were considering rentvesting, suggesting alternative ownership pathways are becoming more widely accepted.
While first-home buyers are a major part of the conversation, some investors and lifestyle-focused renters are also reassessing whether buying where they live still makes financial sense.
Melbourne-based rentvestor, Belinda Gavin, said buying locally initially felt out of reach, prompting her to look interstate instead.
“I looked locally first, but at the time Melbourne prices just felt out of reach for what I was comfortable spending,” she said.
“I didn’t want to wait another 5- or 10-years hoping things would magically become affordable ... rentvesting felt like the smartest way to start building wealth while still living the lifestyle I wanted.”
The emotional trade-off behind rentvesting
For Gold Coast-based rentvestor Allana Hinks, the decision was not purely financial.
She wanted to continue living in an area she loved while still building long-term financial security through property.
“The market where I am is crazy,” she said.
“[Rentvesting] gives me an opportunity to live where I want to live, but also get the capital growth and the investment power that I’m getting in other markets.”
Hinks bought her first investment property in South Australia while continuing to rent on the Gold Coast, giving her access to a very different price point than what was available locally.
“That gave me the opportunity to buy an actual Torrens title property versus a strata apartment that I would be buying on the Gold Coast,” she said.
But she admits the strategy also comes with an emotional adjustment.
“Obviously rentvesting means that you're not living in your own property, which is the great Australian dream and maybe once was the norm,” Hinks said.
Gavin said one of the biggest benefits was flexibility.
“It gave me flexibility without feeling financially trapped,” she said. “Meanwhile, the rent I pay in Melbourne actually helps cover my brother’s mortgage, so in a weird way everyone wins.”
Gavin said her investment property has performed strongly since purchase, although she stressed her focus was initially on entering the market in a way she could comfortably afford.
Rentvesting can involve trade-offs such as:
renting while paying off an investment property
delaying the idea of owning a home to live in
balancing lifestyle goals with affordability
separating emotional decisions from financial ones
managing both rent and mortgage repayments at the same time
An Aussie Broker can help borrowers assess whether a rentvesting strategy is manageable based on their income, expenses and longer-term financial goals.
Why smaller markets are drawing attention from big-city buyers
Markets such as Western Australia and South Australia are drawing interest from some buyers looking for lower entry prices and comparatively stronger rental returns.
Cotality’s latest Home Value Index showed Perth’s dwelling values rose 26% annually to April, while Adelaide’s dwelling values rose 12.2% in the same period.
Rental yields also remain comparatively stronger in many regional and more affordable markets. Regional WA is recording gross rental yields of 5.2%, compared with Sydney at 3.1%.
For some borrowers, that can improve cash flow and make repayments more manageable.
Lower entry prices can make repayments more manageable for some borrowers, while still providing access to detached housing and stronger rental demand.
You may be interested in: Investing in regional vs metro areas
Familiarity with the South Australian market also played a role in Hinks’ decision-making.
“It was my hometown, so I knew the market,” she said. “It was easier being familiar with the area, but I still leaned on professionals for advice.”
That may become increasingly relevant for borrowers considering interstate opportunities.
Gavin said she originally explored buying in Melbourne before deciding interstate made more financial sense at the time.
“Melbourne prices just felt out of reach for what I was comfortable spending,” she said. “Interstate made far more sense financially.”
An Aussie Broker can help compare borrowing capacity across different markets and property types, particularly when weighing up interstate opportunities.
What the proposed tax changes could mean for rentvestors
The federal government’s proposed changes to negative gearing and capital gains tax (CGT) are now adding another layer to those decisions.
Under the 2026–27 Budget proposals, negative gearing would be limited to new residential properties from 1 July 2027, while CGT would move from the 50% discount to cost base indexation and a 30% minimum tax on gains accruing from that date. Properties held before the announcement are exempt from the negative gearing changes.
That may lead some investors to more closely compare new builds with established properties, alongside factors such as affordability, borrowing capacity, rental yield and long-term cash flow.
Hinks said the proposed reforms had already prompted her to reconsider how she approaches investing moving forward.
“I think obviously new builds are going to be far more attractive now,” she said.
“I’m just starting to evaluate what that looks like for my current portfolio versus what I’m doing longer term.”
You might be interested in: Investing in new vs established properties
That caution is echoed by economists, who say tax settings are only one part of the equation.
Dr Diaswati Mardiasmo, chief economist at PRD Real Estate, said affordability, rental yield and cash flow remained critical factors.
“In theory, it may sound more appealing,” she said.
“But if you think about the entry price, it is still so much more expensive to get into a new build in Sydney, Melbourne, or Brisbane compared to somewhere like Western Australia or a regional area.”
She said many buyers were now weighing up whether an established property in a more affordable market could still provide a stronger financial outcome overall.
“It is not just about the proposed rule changes,” she said. “It is about the actual dollar amounts and whether the investment is financially viable for the individual.”
Property investors are still looking for ways into the market
Despite policy proposals, some Australians see property as an important long-term asset.
Cotality's Monthly Housing Chart Pack for May shows investor lending remained strong through late 2025, with the value of investor lending rising 31.8% annually.
Meanwhile, rental markets remain tight nationally, with vacancy rates sitting at 1.7% and rents increasing 5.7% annually.
Co-founder of property management platform, Lantech, Jarman Gosai said investor enquiries on the platform accelerated sharply following discussion around the proposed reforms.
He said sign-ups rose from four in April to 50 within the first 17 days of May, with many investors wanting to understand how changing tax settings could affect their costs and returns.
At the same time, Gosai said many everyday investors were still primarily focused on affordability and familiarity with a market.
“I do find that, especially at the moment, investors are less focused on rental yield and more focused on familiarity with an area,” he said.
That may reflect a shift among some borrowers toward more cautious and financially conscious property decisions.
Why brokers are becoming more important in the decision-making process
Hinks said working with a broker helped her understand how rentvesting could work practically and financially. “I've always worked with a broker to make sure they help me with getting the best from lenders and shopping around,” she said. “They highlighted some of the benefits of doing that.” For borrowers considering rentvesting, broker conversations are increasingly moving beyond simply securing a loan. Instead, a broker can help understand what is achievable in the current market, including:
buying now versus waiting
investing interstate versus locally
purchasing a new build versus an established property
understanding rental income assumptions
modelling potential cash flow outcomes over several years
Christopher Franklin of Aussie Gisborne said many borrowers were trying to understand how the proposed changes could affect borrowing power and future plans. “There are a lot of questions around, do we buy now? Do we wait?” he said. Franklin said some lenders were already adjusting how they assessed negative gearing benefits, while others were waiting for legislation to formally pass. That uncertainty may affect serviceability calculations for some investors depending on when a property settles or receives formal approval. But he said the broader focus for many borrowers remained affordability and long-term cash flow management.
“We're definitely looking at new strategies around where we can save some money,” he said.
“It’s not just where we can save money, it’s how can we keep impacting and knocking this loan down as efficiently as possible while rates are high.”
An Aussie Broker can help borrowers compare lenders, understand repayment scenarios and assess how a rentvesting strategy may affect future borrowing power.
What Australians should consider next
Australians considering rentvesting or interstate investing may benefit from reviewing:
borrowing power
long-term affordability
cash flow sustainability
rental demand
personal lifestyle goals
flexibility if market conditions change
For some buyers, rentvesting may provide a realistic pathway into the market sooner.
For others, waiting, reducing debt or reassessing budgets may make more sense.
One of Hinks’ biggest lessons from rentvesting was learning to separate emotion from financial decision-making.
“Often we only think about our own backyard and local area as the opportunity,” she said.
“But rentvesting provides the opportunity to look at the entire scope of Australia.”
Whether rentvesting suits someone will depend on their financial position, risk tolerance and long-term goals. As housing costs continue reshaping the market, alternative pathways into property ownership are becoming part of the conversation for some buyers.