Rent-vesting strategy explained for Geelong market

Geelong renters are facing a stark reality: the median house price has surged to around $680,000, putting home ownership out of reach for many.

This matters now because the dream of owning a home in the suburb where you want to live is becoming increasingly elusive, even for those who can afford to rent in the area. The Melbourne commuter belt, which includes Geelong, has seen a significant shift towards renting in recent years, with many would-be buyers opting to rent in their preferred suburb while investing in property elsewhere.

In Geelong, areas like Armstrong Creek and the Surf Coast are experiencing rapid growth, with new developments and infrastructure projects springing up along the likes of Surf Coast Highway and Bellarine Highway. Organisations like the City of Greater Geelong and the Geelong Regional Alliance are working to promote the region's lifestyle and economic benefits, but the reality is that many locals are being priced out of the market. For example, a three-bedroom house in a suburb like Belmont or Highton might cost over $700,000, while a similar property in a nearby regional town like Colac or Ballarat might be available for significantly less.

According to data from the Real Estate Institute of Victoria, the median rent for a three-bedroom house in Geelong is around $420 per week, while the median house price is $680,000. This means that renters who want to buy a property in the area would need to save over $136,000 for a 20% deposit, assuming a 80% loan-to-value ratio. In contrast, investing in a property in a nearby regional town could provide a more affordable entry point for would-be buyers, with median prices ranging from $350,000 to $500,000. For instance, a property in Colac might generate a rental yield of around 4.5%, compared to 3.5% in Geelong.

Rent-vesting in practice

So how does the rent-vesting strategy work in practice? Essentially, it involves renting a property in the area where you want to live, while investing in a property elsewhere that generates a strong rental yield. This approach allows renters to maintain their lifestyle and location, while still building wealth through property investment. In Geelong, this might mean renting a property in a suburb like Geelong West or Newtown, while investing in a property in a nearby regional town like Warrnambool or Portland.

As the Geelong property market continues to evolve, it's likely that we'll see more renters turning to the rent-vesting strategy as a way to achieve their property goals. With interest rates remaining low and rental yields relatively high in some areas, the numbers can add up for savvy investors. However, it's essential to do your research and seek professional advice before making any investment decisions. The Geelong property market may be challenging, but with the right strategy and a bit of creativity, it's still possible to achieve your goals and build wealth through property investment.

This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.