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?
RENTING
Pros:
- 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.
Cons:
- 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.
OWNING
Pros:
- 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.
Cons:
- 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.
IN SUMMARY
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.
If you’re interested in renting or buying within Melbourne, contact Melcorp Real Estate, we have a number of listing available that can suit your needs.
Categories: Buy, Rent, Lifestyle
