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Buying vs Renting
The answer will be determined by your desired lifestyle, your views about entering a long term commitment and, of course, your capacity to pay.

Not a simple question

To buy or rent? While this seems to be a fairly easy question the answer varies from person to person. Ever-increasing property prices are a major issue as owning a home appears to get further out of reach. But is buying the right decision?

Homeownership is not for everyone. I f you're always on the move or if you don't want the responsibility of entering a long term mortgage contract you could be better off renting.

But then your monthly housing rental hardly represents a quality investment. Ultimately, your rent doesn't buy you anything and is more likely to help your landlord buy the property you are living in.

Buying vs Renting

Advantages of owning
  • Building equity - As you pay off your mortgage you continue to build equity in your home. The rate at which this occurs depends on the market and whether the prices are rising or falling. This is further enhanced by capital gains on the principal place of residence being tax free. You can also borrow against the equity built up in your home.
  • It's yours - This means that you have the freedom to change the home the way you want. Rental properties in the most part do not allow any more than minor cosmetic changes.
  • Sense of community - Owning a home also makes you part of the local neighbourhood with a sense of pride not often found in many rental communities.
  • Financial gain - If you buy well and your property increases in value you have an added financial gain realised when you sell.
  • On the other hand, owning a home is a big responsibility. It not only means paying a mortgage each month, it also involves other costs such as insurance, rates, taxes, repairs and general maintenance. First homebuyers are often startled by the investment associated with purchasing a house.

Buying vs Renting

Advantages of renting
  • Less stress - The costs of homeownership tend to be higher than the cost of renting the same property. If budgets are tight, it may simply be less stressful to rent.
  • Price changes - The value of homes change over time and in some cases prices may fall. By renting, you are isolated from these concerns.  Then as the market starts to swing back up, you can reassess whether it is better to keep renting or buy.
  • Revenue generation - As you will possibly spend less of your monthly income on renting, you'll have more money available to invest in other revenue generating opportunities.  This is a good strategy if the value of property is falling.
  • Ease of moving - If you anticipate moving frequently, it may make more sense to rent. With the cost of stamp duties on the purchase price of a property it's unlikely that you will be able to make that up in a short period of time.
  • Immediate comfort - When you analyse your capacity to pay, your rental outlay may give you a larger and more comfortable place to live than you could afford in repayments of a mortgage.
  • On the other hand, of course, when you rent after the term of your lease you have no control over rent increases and there is always the possibility of eviction at relatively short notice.

There is not much doubt that for most people owning a home is better over the long term than renting, but before you make your decision do your homework.