Should I Rent or Should I Buy?Aug 23, 2022
The Australian housing market is overheating, and Australians are growing weary of the RBA’s interest-rate hikes. But like all economic downturns, this is only temporary.
Moreover, the swirl of the press has drowned out other breakthroughs. On the 9th of August, both Westpac and CBA slashed four-year loans by 1.6%. In economic terms, this is another leading signal that the property sector is simply facing a minor setback, with the economy preparing for a bounce back.
And yet, statistics from 2018 reveal that 32% of Australians are renting. According to a 600-wide survey in Sydney and Melbourne, there exist people that view renting as a prudent alternative for three key reasons:
- No Loose Ends
There are no strict debt obligations tied to it. Rentals exist free from body corporate fees, fluctuating interest rates or monthly mortgage repayments.
- Live Easy
A house demands ongoing maintenance, and its inputs are time and money. For time-poor professionals, this is simply unsustainable. Hence, people opt to rent rather than buy.
Any job that requires constant travel from one place to the next does not allow for the ownership of a house. Rentals permit such professionals to move without restriction.
What’s the Catch?
Nonetheless, it is essential to consider the long-term financial ramifications of renting versus buying:
- Doing the Math
If you are of adult age, you’re likely looking to settle down under one roof over an indefinite period. Buying a house upfront allows you to divide those costs throughout your stay.
With the exploding rental sector, the same cannot be said. Fortnightly rent conditions, while fixed under a tenancy agreement, are subject to possible price hikes during the renewal of any lease. Under these circumstances, rental costs alone would far exceed the cost of purchasing a home!
Worst of all, each outstanding rent payment does not go into the full ownership of your house; it’s a temporary solution to a full-time accommodation problem.
Let’s put it into perspective. Imagine you’re paying over $730 AUD/week on rent, and a $650,000 flat has caught your immediate attention. If you were loaning $630,000 from the bank, your weekly payments would stay cost $56 less! More importantly, your weekly contributions go towards claiming full ownership of the residence.
Feel free to access Commbank’s repayments calculator for more insight into the refinancing process.
- Housing Security
Owning your residence is an assuring prospect; it provides stability and security. Conversely, a tenancy agreement is established on shaky ground. Once your lease expires, your landlord may not extend it for multiple reasons. Having to move constantly would be a painful exercise!
To make matters worse, the costs associated with moving out add up quickly! According to Domain, the average move costs tenants upwards of $3000. Be prepared to fork out massive sums of both time and money.
- Financial Security
A home is an investment that is subject to market forces. When your home’s current value exceeds the cost you paid to acquire it, you can earn a healthy profit from selling it. Moreover, renting out vacant rooms provides you with an additional source of stable, passive income.
Unfortunately, renting provides you with zero financial security, nor do they offer you secondary streams of income. In fact, it achieves the opposite!
It pays to pay upfront. The earlier you buy a house, the more value you reap! But understandably, you have your personal preferences that fall beyond standard financial considerations.
As a professional buyer’s agent, I have unfettered access to untapped and unlisted properties to match your lifestyle needs or wants, no matter how complex and multi-faceted. More notably, we will provide our undivided attention, assisting you in the entire acquisition process.
We service all our clients with utmost respect and honesty. You share with us what you’re looking for, and we’ll compile a comprehensive list of homes that outshines your expectations.