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Buy or Rent? That is the Question

Should you buy or rent? It is a question that divides Australians every day as more and more property experts weigh in on which option will offer the best results – often achieving nothing more than further confusing readers. For those new to the market, or simply considering their options, buying a home can be a perplexing road to navigate, with prices rising and falling, interest rates to consider and, of course, the worry that comes with a mortgage. On the other hand, those renting worry about getting the most out of their money and feel the pressure to enter the market, but is that necessary?

We’ll be clear here and say we are not going to provide you with the magical answer – simply because there isn’t one. The correct answer is going to be different depending on who is asking, as the decision to invest or to rent is a personal one. Here’s why.

It depends on your financial situation
Of course, for some of us there will be no choice at all as many Australians, young and old, struggle to come up with the deposit required to secure a loan and enter the property market. This leaves only the option to rent and find a suburb that offers monthly prices you can afford.

For others with a little more financial freedom, they need to make a choice on what is achievable for them. You will hear many sayings like “rent money is dead money” and “why pay off someone else’s mortgage?” but don’t assume that buying, then, is the right financial decision for you. While you may be able to come up with the deposit comfortably enough, there are plenty of other costs you need to consider that wouldn’t appear for renters. Extra buying costs include:

  • Maintenance of the property
  • Local council charges
  • Water bills
  • Strata levies
  • Stamp duty
  • Interest payments

Want to spend it elsewhere?
Still have a bit in your savings but not sure you want to use that on a house? There are some renters who prefer to stay in a rental and use their savings to capitalise on other assets. This could be investing in shares, term deposits, starting your own business or simply using it on experiences like holidays before you settle down to save for those bigger investments. This leads onto our next point.

It’s all a matter of lifestyle
Maybe you are not ready to make a large financial commitment just yet and would like to travel a little first? Perhaps you want to enter the market early so you are set for the future? You’ll need to consider what kind of lifestyle you plan on living before making the decision to rent or buy.

For those who want a little more flexibility in terms of where you live and for how long, renting is probably the best bet. Renting allows you to live in those areas you wouldn’t normally be able to afford, making it a great option for professionals looking to reside closer to the CBD. By renting, you also give yourself the freedom to move around as you see fit, whether it be for a new job, expanding family or simply the desire to mix up your surroundings.

Looking for a little more stability? By buying a home you have the comfort of knowing you have the place for as long as you want it (as long as you keep up with the payments!). This saves you the hassle and costs associated with frequent moves that can come at the end of each lease and can guarantee you can stay in the suburb you fall in love with. Best of all, you have a property that is truly yours which you can decorate and modify as you see fit.

Ever thought of doing both?
Yes, it is an option and hear us out. There is a way to get the best of both worlds to an extent by purchasing a property in a more affordable area, then renting somewhere that is more desirable. This ensures you get to live where you like and achieve the lifestyle you want, whilst still saving costs as your expenses are now tax deductible as you have an investment property. You can also consider depreciation benefits.

Ultimately, there’s no right or wrong
No matter how many pros and cons people in the industry can throw at you, the decision on whether to buy or rent will always be a personal one. Whether it is made due to your financial status or because of your personal lifestyle preferences, there is no definitive right or wrong answer: there’s only what’s right for you.