CAN RENTING BE BETTER THAN BUYING?
March 26, 2010 Leave a comment
Current market conditions, coupled with growing concerns over housing affordability, are causing uncertainty for home buyers who are wondering whether they should continue to rent or commit to buying their own home.
Mark Millington, Principal from First National Real Estate Lakeshores says it all comes down to what suits the individual’s personal and financial situation best.
“With property prices and interest rates continuing to increase, mortgage repayments are beginning to be beyond the reach of many young Australians,” Mark said.
“But they shouldn’t panic. Renting offers great flexibility with the option to relocate from home to home and area to area as the need arises, which is not the case with buying a property.
“If finances get tight, or the home situation changes for any reason, it is far harder to just pick up and go if you own your own home.
“Renting is also often a cheaper alternative to buying, especially in the inner city areas particularly favoured by Gen Y-ers who want that urban lifestyle close to where they work.”
While the housing supply and demand equation will continue to put pressure on vacancy rates, the fact remains that monthly rental payments will usually be less than a mortgage repayment for a comparable property.
“One of the greatest advantages of renting is that maintenance costs, repairs, rates and insurance bills are the responsibility of the property owner, and not the renter,” Mark said.
Despite these many advantages of renting a property, there are some disadvantages which will make buying preferable. The most obvious one being that when you rent, you can never really put your own personal stamp on the property or make it reflect your individual style and design preferences.
“There is also the inconvenience, and in some cases pressure, of knowing your landlord can inspect the property whenever he/she wishes (providing they give sufficient notice) invading your privacy and peace of mind,” Mark said.
“But the biggest disadvantage is that you will never pay the property off, as you do with your own home. You will always have to pay rent and therefore the money is lost for good, without any chance of recuperating it in the sale of a property.”
Ultimately, this is where the biggest difference is between renting and buying. An individual needs to consider which will make the greatest impact on their personal net wealth and cashflow over their lifetime.
“Usually, this will be purchasing a home, but it will come down to making sure you buy well and that you buy right,” Mark said.
“This is where the advice and assistance of a real estate agent comes into its own. We have the necessary knowledge, experience and skills to understand the market, its trends and its weaknesses and opportunities and it is what we pride ourselves on. Despite the end of the boost to the First Home Owners Grant, it’s important to remember that the First Home Owners Grant still exists as well as many additional state Government financial incentives.
“So home buyers need to learn to make the most of the services we have available, so that they can make the most of their finances over the long term. There are many creative ways in which home buyers are saving for that first purchase whilst renting and we can help explain the options available.”