Exclusive: Young homebuyers are relying on the bank of mum and dad to get their foot on the property ladder and “rentvest” before the price of new homes soar.
Research from Westpac has found the window for buying an affordable new property is closing after the imminent changes to negative gearing and the capital gains tax discount were announced in the 2026 federal budget.
While existing homes are facing an historic downturn, the price for new builds is expecting to soar. Henry Zwartz
New builds are exempt from the diminishing tax concessions and this loophole could spell doom for investors biding their time.
While existing houses in Sydney and Melbourne are facing a generational downturn, the bank warns demand for building materials will see the cost of a new investment balloon by $100,000.
Millennial and Gen-Z “rentvestors” hoping to enter the market are panicking and have turned to their parents for help to purchase before costs skyrocket.
Rentvesting is buying an investment property in an area you can afford, while continuing to rent where you actually want to live.
Lachlan Brook, 31, had just shy of a 20 per cent deposit for an investment property.
The Sydney pilot couldn’t afford to buy in the NSW capital, but was able to purchase a home in Deanside in Melbourne’s west, thanks, in part, to contributions from his mum and dad.
“Initially, I wanted to do it on my own, so I was reluctant to ask my parents for help,” Brook told nine.com.au.
“However, it made financial sense to see whether they were willing and able to assist by acting as guarantors.”
Lachlan Brook used his parents as guarantors to buy an investment property. Lachlan Brook
Brook didn’t want to drain his parents’ bank accounts but instead leaned on the equity of their existing home, saving the cost of lenders mortgage insurance (LMI).
He said there still is a “stigma” in his generation associated with being gifted a deposit.
“However, given current house prices and market conditions, I don’t think there’s any shame in accepting support if it’s available,” he added.
“There have been a few friends that have gone down a similar path that I have, to also try and get their foot in the door earlier.”
According to Compare the Market data, around nine per cent of buyers use guarantors.
It comes with a natural financial risk to the guarantors.
OpenCorp chief executive Cam McLellan said that done properly, using existing equity for investments can be a worthwhile idea.
“Done carelessly, it can hurt everyone,” he said.
“Now we’re seeing it regularly. The bank of mum and dad used to carry a negative connotation, like parents were spoiling their kids.
“That’s changed. More parents are realising that if they’re in a position to help, it can be a smart family wealth decision, not just a handout.”
The key is ensuring the benefactor of the guarantor can make repayments.
“The families I’ve seen get this wrong do it on emotion rather than the numbers,” McLellan added.
“The ones who get it right treat it like a business decision.”
Cam McLellan, OpenCorp CEO. OpenCorp
‘Everything hitting at once’
House values have been taking a caning during the past several months due to three consecutive interest rates, changes to capital gains tax and negative gearing, as well as the impact to consumer confidence of the US-Iran war.
Construction prices are expected to climb as prospective buyers ignore established homes and turn their attention to new builds.
OpenCorp research found new land prices may increase from five to ten per cent, while the cost of a new build could climb by a similar figure.
Investors are in a race against the block before the price of these homes surges by nearly $100,000 by mid-2027, the new data suggests.
“The thing with the building industry is that if supply material costs go up, they never come back down, regardless of whether the cause of the rise has dissipated,” McLellan said.
McLellan anticipates a construction bottleneck over the next 12 to 18 months, too, as the approval pipeline strains under demand.
“It’s not one thing, it’s everything hitting at once,” he added.
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