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Surging Property Prices Lead to Rise in ‘Stayvestors’
As Australia grapples with rapidly increasing property costs, an increasing number of first-time homebuyers are opting for innovative strategies to secure their footing in the competitive housing market. One such individual is Arjun Chowdhury, a 25-year-old from Sydney who has adopted the role of a ‘stayvestor’—a term describing those who purchase investment properties while continuing to live with their parents.
A Unique Approach to Home Buying
Chowdhury purchased his first home—an off-the-plan apartment in Willoughby—back in August of last year. Despite having saved diligently for a decade, he now relies on the support of his parents to manage the financial demands of home ownership. “With the current interest rate climate, managing a mortgage is quite challenging, especially for someone new to the workforce,” he explained.
Having put down a 10% deposit, Chowdhury’s parents assisted with the upfront costs, allowing him to enter the market despite its hurdles. He initially aimed for a property to live in but realised that purchasing an investment property would be more feasible given the steep prices in Sydney.
“I had to forgo the First Home Owner Grant, which was a tough decision,” he remarked. “The areas I considered were well beyond my budget, prompting my shift towards an investment property.”
By living at home, he has the advantage of utilising rental income from his investment to alleviate monthly mortgage repayments. Although Chowdhury acknowledged that this approach could be perceived as a loss of independence, he feels it is a necessary sacrifice to enter the daunting Sydney market.
The Growing Trend of Stayvestors
Chowdhury represents a growing demographic of ‘stayvestors’—young individuals who invest in properties while remaining in parental homes to manage costs. Tim Abbott, director of projects and developments at Ray White, predicts this trend will continue to gain momentum as housing affordability remains a pressing concern.
“It’s increasingly difficult for first-time buyers to start their property journey due to soaring prices in Sydney,” Abbott noted. For many, the goal is to secure a property that can serve as a future home while managing the initial financial strain.
Financial Considerations
Chowdhury and others in similar situations face the challenge of ensuring financial stability even without tenants, as well as potential limitations on government grants that typically assist first-time buyers. He also highlighted the long-term implications of investing, particularly capital gains tax should an investment property be sold later.
Today’s youth often require parental support to navigate the housing landscape successfully, whether that entails living at home, receiving financial contributions, or having family members act as guarantors. Recent research from Mozo revealed a significant increase in parents providing monetary assistance for home deposits, with 75% doing so unconditionally—a rise from 33% in 2021. The average amount gifted has ballooned to $74,040.
Chowdhury appreciates the ongoing support from his parents, stating, “Our relationship is strong, and living with them has proved beneficial. I also help around the house and contribute to grocery costs.”
The cultural dynamics at play can also influence this trend, as Chowdhury, who identifies with an Indian heritage, noted that moving out is less of an expectation within his background, allowing for an extended stay at home without societal pressures.
Future Plans
Looking ahead, Chowdhury intends to rent out his completed apartment—currently projected rental prices for similar one-bedroom properties in the area range between $600 and $700 per week. He plans to reassess his living situation in a couple of years to decide whether to transition into independent living or continue with this advantageous arrangement.
Amidst current economic conditions, strategies like Chowdhury’s become increasingly relevant for young Australians attempting to navigate the property market. With continuous support from family and a keen understanding of financial management, stayvestors have found a viable pathway into homeownership amidst rising challenges.
