To buy or rent – which is better?
Owning a home has long been considered the great Australian dream, but while having a property to call your own comes with certain perks, there are also advantages to renting.
So which exactly is better – should you buy or rent? Here we look at the pros and cons of each and how both can offer benefits at different points in your life.
Property ownership pros
With house prices rising over recent years, there’s been a lot of talk about both the pros and cons of buying and owning your own home, not least of which is the concept of capital gain.
The reality is, increasing house prices have improved the financial position of many people who own a property, and this trend has been evident for decades.
Buying and owning property is generally considered a fairly sound financial strategy as typically its value will increase over time.
In addition, there’s also the benefit of housing security. When you own the home you live in, you have a sense of security that you can live there as long as you please, and make the changes you want.
Property ownership cons
While owning a property comes with the potential benefit of financial and housing security, there are also some cons, not least of which is paying a mortgage and managing fluctuations in interest rates.
According to the latest Census data, of the 66 per cent of people who own their own home, more than half of those have a mortgage, and we all know interest rates have increased markedly in recent years.
Meanwhile, there are also additional costs involved in owning a property including maintenance, rates and more.
And while property holds a high value, it’s an illiquid asset. In other words, if you’re looking to convert that asset into cash, it takes time.
Renting pros
Over a third of the Australian population rents the property they call home, and with housing costs increasing that statistic looks set to rise in the years ahead.
But it’s not necessarily a bad thing not to own the home where you live.
Renting provides flexibility, in that you can shift from one property to another relatively easily.
In the interim, you have the opportunity to experience different areas, different housing styles and different communities without the major commitment of purchasing.
You also don’t have property maintenance costs to consider or expenses such as rates.
Renting cons
That said, there are of course cons involved with renting, not least of which is the current high cost and the low vacancy rate.
In other words it can be hard to find a suitable rental, and when you do the price can be high.
In the interim, the money you spend on housing isn’t going towards your financial future. It’s simply an expense.
Then there’s also the issue of security of tenure. In other words, will the rental agreement be renewed at its conclusion or will you be forced to seek another rental elsewhere.
Finally, an obvious con of renting is that there are limits to what you can do to the property. You can’t paint, modify or alter it without written permission, and any improvements you do make would be for the benefit of the owner.
It’s a personal matter
In reality, whether you buy a property or rent a home is a personal matter that can be dependent on a whole range of factors including your financial situation, stage of life and more.
But each scenario comes with both pros and cons to weigh up.
If you’re considering buying or selling a property and seeking to understand the current market conditions, why not chat with one of our friendly agents to understand how we can help.
Alternatively, if you’re looking to rent a property, you can view the properties we currently have available here.
