Gen Zs pip Boomers in taking up new investor loans: Survey

Surprising new research finds under 30s could become the new generation of landlords, pipping Baby Boomers in taking out recent investor loans.

Australians aged 28 and under outshone Baby Boomers in reporting their most recent home loan was an investment loan, according to new research.

The Your Mortgage Home Loan Hindsight report unearthed the surprise finding in its comprehensive survey of 1,049 Australians with home loans.

It found Gen Z, born between 1997 and 2012, were most likely to report the most recent home loan they’d taken out was an investment loan (17%), edging out Boomers (14%).

The finding supports 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 house referring to people who purchase an investment property while continuing to live at home.

What does the data say?

Gen Zs and Boomers led the generational divide of people reporting their last home loan was an investment loan, but there was a marked difference in their property ownership rates.

Of the Gen Z borrowers taking out an investor loan, 54% reported owning only one property, compared to just 7% of Boomer investors.

Eight in 10 older investors reported owning either two or three investment properties, while another tenth owned four.

Show me the money

As expected, older borrowers tended to have smaller outstanding mortgage balances than younger borrowers, given they’ve typically had more time to pay off their loans and, in many cases, have benefitted from lower property prices.

Younger people, Gen Zs and Millennials, carried the highest median mortgage balances but had higher median household incomes than Baby Boomers, likely due to many being retired.

More than 80% of the youngest generation of mortgage holders reported buying their properties within the last three years, while almost half of Baby Boomers had purchased in 2010 or earlier when property prices were significantly lower.

What does the future hold?

The data appears to show a shift in generational interest in leveraging real estate as a financial tool, with Gen Z having the potential to become the next ‘landlord generation’.

For Baby Boomers, it reflects wealth accumulated over decades, with many owning multiple homes and carrying smaller outstanding loans.

But it also highlights new approaches among young people to get into the housing market in the face of high property prices and stagnant wages that have failed to keep pace.

Younger generations may increasingly adopt this shift in homeownership strategy as rising property prices and limited supply constrain their access to the market.

See also: Australians face housing crunch amid high interest rates and rising rents

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