Owning property has long been the great Australian dream. However does it make more financial sense to rent? Many may look at the incredible increases in value of the property market through the mining boom and think that buying is the obvious choice. These sort of returns are unsustainable and the Australian property market is starting to slow. We will look at some of the advantages and disadvantages of renting and buying.
Renting is generally cheaper than buying especially when considering things like maintenance costs, while you may be able to rent in an area that you can’t afford to buy in.
Renting provides more freedom in moving if you get a job in another suburb, state or country. There isn’t the worry of trying to sell a house then buying a new one once you move.
There will always be the uncertainty with renting as the owner may want to sell or move in meaning that you will need to find a new rental. This also doesn’t allow you to make the home your own.
The rent you pay doesn’t help you build assets for the future and you will always be paying rent.
Stability is the biggest positive with buying as you have the assurance that you don’t have to move out unless you want to.
As you pay off the mortgage you are building equity in your house which can be helpful in the future if wanting to purchase an investment property.
The family home is a tax free investment.
A mortgage is a long term commitment so there is the risk that sometime in the future you may fall behind on repayments and be forced to sell.
The interest paid over the term of a mortgage is usually high.
There can be many extra costs with owning a home as maintenance can be expensive if something was to happen.
Property is a fairly illiquid asset so it can be a lengthy process in you need to sell.