To Rent or To Buy?
According to the 2021 Census of Population and Housing, 66% of Australians were homeowners compared to 30.6% who were renters. While owning a home may seem like the ultimate step to reaching your Aussie dream, not everyone is sold on the prospect of paying off a mortgage long term, opting to rent instead.
So what is the better option, renting or buying?
- Financial freedom. Since you won’t have a mortgage, you can have more flexibility with your finances.
- More mobility. Renting allows you to decide whether you want to stay in a home for the long or short term, allowing you to move around with ease instead of being tied to one place.
- No paying for repairs, maintenance, or property taxes since this is the job of the landlord or property manager.
- Amenities can come at no extra cost, such as the use of a pool, gym, or outdoor barbecue facilities.
- Paying rent can stay at a constant rate for an agreed contract, whereas paying a mortgage can vary depending on fluctuating interest rates.
- Many rental properties don’t allow pets.
- Cannot re-design or re-structure a property without the permission of the landlord or property manager.
- Associated costs in the overall rental process such as paying a bond or rent in advance.
- Lifestyle uncertainty. You will rarely sign a lease for longer than 12 months, which means you may not know how your current lifestyle could look in the future.
- Lack of privacy. Landlords or property managers can undertake regular inspections.
- Long-term investment. Owning a home is an asset that can increase in value over time and help you build wealth.
- Building equity and a property portfolio can help when buying a second home or undertaking renovations in the future.
- Freedom to re-design, re-structure or make changes to the existing property.
- Living security and privacy. Unlike renting, when you own a property, you won’t have to worry about moving once your fixed or period lease is up, nor have a property manager inspect your home.
- Large costs upfront and long term, including mortgage deposit, ongoing interest payments, and further repairs and property maintenance costs.
- If you live on subdivide land such as a duplex, apartment building, or block of units, you are required to pay body corporate fees.
- Budget constraints may mean you are unable to buy a house in an area that you would like.
- Commitment. Once you have bought a home, you may find you have less mobility in moving to a new city or pursuing future lifestyle goals since you are tied to ongoing financial payments.
Melcorp Real Estate has considered the pros and cons of both buying and renting a home and has concluded that neither option outweighs the other. Instead, it is ultimately up to you to decide what your needs and long-term goals are.
We advise you to:
- Make a list of your future goals – consider where you want to be in the next 10 years, travelling or staying put, will you have a family to care for?
- Assess your financials. Ask yourself if it is feasible to put a payment down on a house right now, have you considered silent costs such as stamp duty, loan fees, insurance, etc?
- Research the areas you’d like to live, recent sales and renting prices, and chat with local agents to understand how the market has been trending.
Categories: Buy, Rent, Uncategorized