1 July, 2014 / Category: Blog
To make the most of the present, it can sometimes pay to revisit the past. After all, trends come and go, and many old classics are joyously recycled. From cars, food and beards on footballers to the ‘big picture’ things, such as how and where we live, and why.
As we spend more time relaxing (and defrosting) inside out of winter’s reach, many of us find ourselves re-assessing how our current homes suit our personal and financial circumstances, and once again, entertaining the old, gold question of whether to rent or buy. After all, as times, and market factors, change, so do we.
There’s no doubt that renting has its benefits. As housing prices, especially in what many consider to be more desirable postcodes, become less and less affordable, more and more Australians are adopting the European attitude to renting as a justified and sensible longer-term solution.
This is particularly true for those opting for the kind of cosmopolitan lifestyle that an urban, inner-city locale affords. A bond for a rental property (typically reflective of one month’s rent) is of course a much cheaper and quickly accessible goal than saving up for a deposit for purchase.
With exception to the possible bond deduction to cover repairs for the ding you put in the hallway plaster that Friday eve, property maintenance is handled and paid for by the landlord. Landlords are also responsible –or, more accurately, your rental fee is inclusive of- owner’s corporation, insurance and council rates.
All these things combined, and your cash flow will naturally be higher by default. And, for those with a need for flexibility, renting presents itself as the perfect solution. With some careful planning and negotiating within the terms of your lease agreement, you can effectively pick up and move elsewhere should the property or location no longer suit your circumstances.
A home that’s truly yours. It’s ‘The Great Australian Dream’; a rite of passage that’s romanced us since we were old enough to knock up a paperbark shanty in the backyard as kids.
For many, one of the most appealing aspects of home ownership is the ability to make improvements to your space, and to personalise it to suit your own needs- not to mention, your style. Internal modifications like colours and flooring or external changes such as rendering and fencing are yours to decide upon, so no more letters to the landlord begging their permission to install that woodworking bench in the living room (save the pleading for your one and only).
And if you’re feeling inspired, there’s always the thrill of mathematics to warm the cockles. An enforced savings in what is often a tax-deductible asset, when you buy a house you are paying off your own asset rather than someone else’s. And, if you buy the right home in the right location, it will generally go up in value and therefore create equity in the property.
Property prices are fixed on date of purchase, and as rental prices grow and income inflates, repayments become smaller over time, not to mention a smaller percentage of your income (assuming your income is likely to increase with time in your profession). If you’re quite happy with the film of dust on your scientific calculator, the web affords us some excellent mortgage repayment calculator tools to help you break things down into your very own clear-cut repayment vs rental scenario.
What once was a rite of passage, romantically known as ‘The Great Australian Dream’ is further and further out of reach for many Australians. The decision to rent or buy comes down to your personal, lifestyle and financial priorities, and how strongly and surely these priorities align to your short-term and long-term goals. With more and more Australians valuing flexibility and access to a cosmopolitan lifestyle over stability, it would seem the coveted ‘Great Australian Dream’ may be worth redefining.
So, if you find yourself grappling with the decision of whether to rent or buy, either for yourself or perhaps on behalf someone near and dear, do involve us in the conversation. It’s a great one to have, regardless of the circumstances.
Victoria Whittaker, Buyer’s Advocate