The proof is in the pudding – buying a property comes out on top as the smarter investment. Here’s a look at why.
The rent vs buy debate is one that has divided the nation for many years. While renting is largely the preferred choice, due to the fact that it’s most accessible, there’s no denying that buying is the dream for many. The first step in the journey to buying a property – saving for the deposit – is what holds many back, but data from the latest census highlights that once this hurdle is cleared, the distinction between what you’re shelling out on rent versus mortgage repayments is comparable.
The ups and downs of rents and mortgages
When you look at the latest census data, you can clearly see the variations in the market that make buying number one – without a doubt. When you compare 2016 census data with 2011 census data, it’s clear that the median rate of rent has grown to $1452 per month, an increase of 17.6% over the past five years. On the other hand, the median monthly mortgage rate has dropped by 2.6% to $1755 per month. It’s clear that the gap between the cost of renting and making mortgage repayments is growing smaller, and when you consider the steep rise of rental prices over the past five years, you can feel even more secure in a ‘bricks and mortar’ investment.
More reasons to stop renting
From an economics perspective, buying wins, but there are more reasons to support the move to buying a property. There are many costs associated with buying your own home, but all in all the long-term wins should outweigh these.
You bolster your financial portfolio
Your home is a very real investment that can appreciate over time. If you’ve done your research into the market trends and bought wisely, you’ll likely be rewarded year on year with value growth of your property. Furthermore, once you have your home loan, in most states, you’ll be able to tap into equity further down the line. This gives you more options when it comes to investing in your future – whether it’s buying another property or otherwise.
Money spent will help your mortgage
Rather than covering your landlord’s mortgage, put all your dollars towards your own investment. Real estate, whether you rent or buy will always be one of your biggest costs, and when you own, everything spent here will support your own financial security. Plus, if you buy in the right spot, your mortgage repayments may be comparable to rent prices. A recent CoreLogic report highlights how some suburbs, specifically in Hobart, Tasmania, are really promising investments. In some cases, properties are pulling rental yields of 5%, which when combined with affordable property prices and an enviable lifestyle, could make this a sound investment.
You’ll enjoy new freedoms
Perhaps it’s the pet cat you’ve always wanted or the knowledge that you can paint the walls whenever you please that is the cherry on top of your new home. One of the best things about owning a home is the freedom to live by your own rules and the pride you can take in keeping it at its best. Plus, you’ll be an invested part of your community and be able to make contributions that increase the liveability of your suburb.