Is it better to rent or buy property? It’s an age-old question that continues to spark debate.
In previous years Australian property prices, particularly in Sydney and Melbourne, were among the most expensive in the world, forcing many buyers out of the market.
However, a sluggish economy and subdued property market has once again opened doors for those looking to get on the property ladder.
With the residential market recovering from recent lows and house values still well below peak, the question of whether to rent or buy is more relevant than ever.
It’s more affordable
One of the main benefits of renting property is the ability to live in an area that you may not be able to purchase in. A perfect example is Bondi where the average weekly rent for a unit is $675 but the average purchase price is $1,050,000, according to realestate.com.au. Renting offers affordable living without having to comprise on location or lifestyle.
Less upfront costs
Another key benefit is the fact that you don’t need a large deposit. In order to buy property, you typically need to have at least 10 per cent of the purchase price for a deposit. If you’re purchasing in Bondi, that’s $105,000. In most scenarios, if you want to avoid paying Lender’s Mortgage Insurance, you’ll need a 20 per cent deposit. Add in your conveyancing, pest and building inspection and solicitor fees and the numbers quickly add up.
You also don’t need to stress about ongoing maintenance costs or problems as in many instances it’s the landlord’s responsibility.
You’re paying someone’s mortgage
Though there are drawbacks, with the most obvious being that you’re not paying off your own property. Unlike a mortgage, rental payments are never-ending and essentially go towards the landlord’s income.
Lack of stability
Along with this, the flexibility in renting can also be seen as a lack of stability. When your lease ends you have to either negotiate a renewal or move to a new property, both of which require time and effort.
Rules and restrictions
You also have to abide by the landlord’s rules, which means you may be restricted when it comes to making the space your own. Renovations and substantial redecorating are usually off the table and pets may be prohibited.
Security and stability
As previously mentioned, there is security in owning your own property. You won’t have to deal with finding a new property at the end of a lease and can work towards turning the house into a home. This stability is particularly appealing for those with young children.
You’re in control
You’ll have full control of the building, meaning you can design the space to cater for your needs without having to seek approval from a landlord. You can even turn the property into an investment down the track.
Paying off your own mortgage
Owning a property also means you won’t have to deal with annual rent increases. You can make repayments at a fixed rate which enables you to better plan your finances. It can also act as a form of enforced saving, encouraging you to spend less and pay off your loan sooner.
It’s important to do your research before purchasing property, particularly when it comes to your holding costs. A simple way for buyers to do this is by using PropCalc.
What is PropCalc?
PropCalc is an essential cash flow calculator that could help thousands of Australians reduce their risk of mortgage stress. The tool is revolutionising property research by using key market analysis and customisable data to show exactly how a purchase will affect your finances.
Can PropCalc help you decided whether to rent or buy property?
Yes. PropClalc allows you to customise and personalise data to produce results tailored to your situation. More than just a mortgage calculator, PropCalc allows users to personalise data such as purchase costs, property income, annual expenses and cash flow. Available online or as an app, the free calculator also considers the stamp duty, variable deposits, interest rates and finance fees.
To help first home buyers and those less familiar with the housing market, PropCalc prefills suburb price averages in line with the property you’re interested in. Keep this prefilled data or change it to suit your needs – it’s completely up to you.
Once you’ve personalised the data, PropCalc will show you a full breakdown of the holding costs of any property you’re interested in. Compare the results to your current rental property to get a deeper understanding of what you can truly afford.
Start using PropCalc today
PropCalc is free of charge and available in MyBMT, a comprehensive portal designed to help investors access and manage their depreciation and property needs.
The interactive platform gives you on-the-go access to depreciation information, insurance quotes, valuable market analysis and helpful property tools.
To join more than 120,000 people enjoying the benefits of PropCalc, visit bmtqs.com.au/propcalc today.