HOME OWNERSHIP WHY IT’S GOOD FOR YOU

We’ve seen scarcity of rental properties and rental affordability go through the roof. Rising inflation and cost of living made a deposit harder to save. Rising interest rates reduced borrowing capacity.

There is an identified rental crisis in Australia and increased rental demand at a time of very low vacancy rates will see rentals continue to rise, probably for the next few years.

The opening up of international borders will only increase demand, and the return of foreign students will mean increased pressure on apartment rents close to education facilities and in CBDs.

In September 2022, it was suggested that there were only around 33,000 vacant properties in Australia, but we could expect 200,000 new immigrants.

Reasons Why You Might Prefer To Buy Than To Rent

Renters are more affected by market forces. When you buy, you lock in repayments at the price you paid, which obviously will fluctuate according to interest rate changes; but, as you pay down your mortgage, things get better.

If you rent, then you will always have to pay market rent for a home you hold no equity in. You have certainty of tenure. Generally, any decision to move is yours.

Even small increases in the value of the home you’ve bought might lead to a much bigger financial gain than saving what was your deposit and renting instead. Getting on the ‘property ladder’ and levering on the equity is real.

Economist Nerida Conisbee suggests there are more than double the number of people under rental stress than there are under mortgage stress.

As a first home buyer, you are likely to be youngish and possibly don’t think ahead to retirement, but the facts show that poverty is more likely at retirement if you are a renter.

When you are on a retirement income, paying what is market rent is a very different scenario than having a home you have paid off.

An Australian Bureau of Statistics report late last year showed that 24 to 39 year olds were far more likely to rent than their parents at the same age. Whenever you buy your first home, it is likely to be your best financial decision in the long term.

Whether we are talking about renters or buyers, the bottom line is that there must be enough homes for people to live in. Where there is significant development, long term affordability is a greater possibility, with more stable house prices and rents.