So the Reserve Bank Board met on Tuesday, 5 July and – drum roll, please – official interest rates remain on hold at 1.75 per cent.
Great news for those looking to buy, but is it a big enough push for those on the fence? One of the most-asked questions in real estate is: Is it better to rent or buy? Lets take a look at three factors that influence the answer.
Is it really cheaper to rent than it is to buy? Sometimes it is. Affordability all comes down to location. If we take Applecross as an example, we know that the median rent per week is $500 while the median house price is $1,460,000. At the current bank rate of 2 per cent with a 20 per cent deposit and repayments spread over a 30-year mortgage, you’re looking at repayments of $996 per week – almost double the cost of renting. So, yes, in Applecross it is cheaper to rent than to buy.
If we look a little further down the freeway to Orelia, we see that the average house price is $230,000, with repayments of around $188 per week. The median weekly rent in Orelia is $270. In this case it’s cheaper to buy than to rent.
At the surface level you know that when you rent, the responsibility for repairs and maintenance lies with the property owner. But as a renter, how much do you really know about the house you’re living in? Tenants don’t receive comprehensive reports about the condition of the house, and that can be a little disconcerting. Sure, you don’t have to pay for maintenance – but you do have to put up with the inconvenience of repairs. You also have no say in regard to the ways the repairs are carried out and their end result. This uncertainty is not for everyone.
The final issue to focus on is flexibility of living situation. A lot of people choose to buy because they want stability, but this is also achievable in a long-term rental. There are many landlords who would relish having a long-term tenant, particularly when the market is unpredictable.
As a homeowner you can’t just give notice and leave with the same ease as tenants, but you’re not stuck in the same property for the duration of your loan either. If you plan correctly, your home can appreciate in value, which eliminates the need for the dreaded savings.
Want to know more about your options? Call Rentwest Solutions or Custom Financial Solutions to see if you are eligible to take that first step on the road to property ownership.