Should I Buy or Rent: How to Answer This Question

18th Sep, 2020 | First Home Buyer

In this article:
The good old rent vs buy debate – is buying a house still the great Australian dream?

The rent vs buy debate has evolved over the years. In 2021 that there’s much more to it than which option is financially superior. One of the great lessons of COVID-19 is the importance of family, security and stability when making decisions about where we live, where we work and how we spend our money. It makes sense that renting vs buying falls into this new kind of decision making.

Should I rent or buy?

There’s a lot to be said for the enforced savings of building equity in your own home with each mortgage repayment.

There are many first home buyer incentives in Australia to offset the upfront cost to purchase a home. Many people also value the security of homeownership, knowing they’ll always have a place to come back to, especially once they retire. Having to pay rent after retirement may cause financial and emotional distress, but for others renting can bring more flexibility.

Whether it’s cheaper to buy or rent depends on where you live in Australia and the type of property you wish to settle into. Some renters may be in a position to make substantial savings by renting rather than buying as long as they invest their spare cash responsibly. However, this takes consistent and disciplined action to achieve. There’s a lot to be said for the enforced savings of building equity in your own home with each mortgage repayment.

Get it right from the start with professional help.

Rentvesting – the best of both worlds?

Some people put one foot in both camps and rentvest. They live where they want but also invest in a home that will attract quality tenants, experience low vacancy rates and get the benefit of capital growth. Loan interest rates are usually higher for investors, but you may be eligible for tax concessions that could offset this cost.

What’s the definitive answer?

It’s difficult to ascertain a definitive outcome to this debate. Buying rather than renting may be a good choice in some locations, and a not so good choice in others. Results may also depend on an individual’s financial astuteness rather than which option they chose. Outcomes could be affected by the timing of buying and selling.

As individuals and families, we weigh up our living requirements and the financial cost of each option while also considering how we feel about security, flexibility and uncertainty to make a decision. The decision-making process is highly subjective – what could be a priority for one person may be lower down the list for others.

Homeownership may not be for everyone, and there’s a range of valid reasons why some of us aren’t interested in climbing the property ladder. But, no matter what side of the fence you’re sitting on, you’re still making a serious financial decision for your future. Seeking expert advice to ensure you’re not left behind is a great way to start putting your plans in place. Our Yellow Brick Road mortgage brokers can give you the low down on costs, risks and benefits associated with renting and buying and help you find the best course of action that suits your personal circumstances.