Since 2016, home ownership in Australia has been on the decline. And, with an average Australian house price of $681,100 (according to the Australian Bureau of Statistics), it’s no surprise more people are turning to renting.
For many, getting on the property ladder is one of life’s biggest achievements, while renting suits others just fine. But is one better than the other? It’s a question that most people have asked, and one that we can help you answer.
Renting in Australia
There are many reasons Australians are choosing to rent over buy, and it’s not just because of the money – it’s also about the freedom. The ability to move whenever a lease is up is highly appealing to those who aren’t ready to settle down in one place.
Largely, renting is much less financially stressful than buying. Saving for the deposit on a first home can take a lot of time and sacrifice as opposed to upfront rental costs, which usually only include a couple weeks of rent in advance and a bond. After that, renters only have to pay for the rent and utilities. While, depending on where you rent and what type of dwelling you rent, rental property can be expensive, these costs are often spread out amongst flatmates or a partner, and the major expenses like property tax or home repairs are taken care of by the property owner (usually).
Finally, because you’re saving money when renting, you can spend more on your own interests (brunch, anyone?) or even save for a house down the line when you are ready to settle.
Flexibility can be a con as much as a pro when it comes to renting. The property market changes regularly, and property managers and landlords are within their rights to change the rent amount once a lease ends. In some cases, this might force renters to move out and find a cheaper place, which can be a highly stressful time, especially if you weren’t ready to go yet. Additionally, rent never stops – home owners can pay off a mortgage, but renting means you will need to make those rental payments forever.
A sacrifice that renters often have to make is finding the “perfect” place, and while buyers have to sacrifice “perfection” too sometimes, at least buyers can make changes and alter their place without asking a landlord’s permission.
How to decide if renting is right for you
Consider your lifestyle and ask yourself: do you currently value flexibility above everything else?
Buying in Australia
One of the biggest pros about becoming a home owner is the stability. The house is your own, and based on your home loan agreements, you know exactly what you’re going to be paying, and for how long. Depending on the market and the way you maintain your property, your home can become a massive asset to your financial future. Should the home increase in value and you decide to sell, you could make a strong profit.
Australia sets up first time home buyers with tools to help them get on the market. The First Home Owners Grant helps those who are eligible pay for their first home. Plus, a first home loan with BOQ is a smart decision for home buyers who want personal service and peace of mind.
Of course, owning a home means you get to do whatever you want with your property. For some, that means interior design and home renovation, but a lot of younger property buyers are simply looking for a better place for their pets to live!
Buying means you have a (often) large financial responsibility on your hands – mortgage and home loan payments need to be paid regularly otherwise you risk falling into debt and hurting your credit score, and unfortunately, those with a mortgage are the most likely to be over-indebted in Australia, according to ABS.
Of course, you can only fall into debt if you can first afford to buy a home in the first place, and getting on the property ladder is no easy feat. Depending on your income, saving for expenses like the initial 20 per cent deposit, stamp duty, government fees, conveyancing costs, etc. can mean you’ll need to sacrifice in other areas of your life.
One more thing to consider is, while usually a house can be a financial asset, if you make a bad renovation decision or your neighbourhood decreases in value, your home’s value will decrease with it.
How to decide if buying is right for you
You’re ready to buy a home in Australia if you’ve done your market research and you’re confident that you’re ready to make roots and can responsibly take on the repayments. If you’re a first home buyer in Australia, take a look at the Government First Home Owner Grants that may be available for you to take advantage of to get into your first home sooner.
If it’s still not clear whether renting or buying is for you, head into your local BOQ branch and have a chat to our friendly staff.