To rent or to buy, that has been the question Australia's expensive property market has been fighting with for so many years. The decision to rent or buy almost always comes down to financials. Can you afford to buy?
The Australian real estate market is filled with expensive properties that only get more and more out of reach for buyers as the years go on. In fact, right now many Australians are finding that homeownership is just not in the cards for them.
House hunters in Australia are having a hard time finding affordable places.
Younger generations leaning towards renting
According to a survey by ServiceSeeking, 1 in 4 Australians who do not currently own a home are also of the opinion that they will never own one. It's so out of reach that 35 per cent of those who don't currently own property don't even consider home ownership a major priority.
This logic, of course, goes against the grain of the common dream of owning your very own place. But this probably leaves a lot of people wondering, what are the real differences between renting and buying?
Is it better to rent or buy?
Unfortunately, the answer is somewhat of a grey area. The right answer, of course, comes down to your financial situation. Can you afford the initial deposit? And once you've put that down, will you be able to keep up with the monthly payments, or even be able to pay for any unforeseen costs of the mortgage itself or home maintenance down the line?
Yes, affordability is the biggest factor - it's much easier, and cheaper, for people to get a rental. Or is it?
From a financial standpoint, buying was better than renting across Australia's capital cities.
Recent research conducted by economists Dominic Crowley and Shuyun May Li sought to come up with a more concrete answer to the affordability question in their research published by the University of Melbourne. They found that it wasn't so much about the finances, but rather it was about being in the right time and place. Their research explained that from a financial standpoint, buying was better than renting across Australia's capital cities. However, the timing of that purchase would matter big time.
"In each capital city, there were prolonged periods where the median house price rose strongly ... In each city there were at least four years where the median house price increased by more than 10 per cent in real terms," explained the economists.
At the end of the day, home ownership does appear to be the more sound choice. But that shouldn't discourage renters. Finding the right rental place within your budget will help you save to make that initial deposit one day.
Let us here at First National Real Estate help you find that place. Contact our team today.