The rent vs. buy debate has raged on for many years with supporters and detractors on both sides of the fence. The same arguments are made each time the subject comes up. Being tied down in one place and the extra costs associated with home ownership are two of the reasons put forward against buying a home. Paying rent to feather someone else’s nest and having to get permission for everything are equally valid reasons against renting.
Some recently released figures have ignited the debate yet again and proven conclusively that on current market activity, both in sales and rentals, there is very little difference in cost between buying and renting when spread over a 30 year period. Both totals come in at around the $1 million mark based on national median prices of mortgages when compared to current rental costs.
The Rent vs. Buy Debate is not as Simple as it Seems
We were not surprised by this result, but when asked about it by some of our clients we expressed our concern that people make decisions based on these figures alone. There are other issues around this debate.
As an astute property management agency that has managed rental properties for a number of years, we know for example, that some people are in rental accommodation because they do not have the income or security of employment to buy their own home.
Casual Employment Gives no Long Term Security to Service a Mortgage
The significant proportion of our workforce now working in part-time or casual employment have difficulty qualifying for a home loan unless they have a very substantial deposit. Their employment status also goes against them, as they are not considered to be in secure employment.
At Position One Property we meet all kinds of people who want to rent a home rather than buy it. Some are in the area on short-term work contracts and only want a 6 month lease as they will be going back home when their contract finishes. Others are building a home and only need rental accommodation only until it is completed and they can move in.
Low Income Earners Need Good Rental Accommodation
Many are on low incomes and need affordable long-term accommodation but they have no desire towards home ownership. While they can pay their rent, they would be unable to pay rates, insurance and the cost of maintenance.
The current low interest rates are attracting many buyers into the market, and for those who have the ability to service a mortgage over a long period of time, this is a good time for them to buy. Hopefully, when interest rates increase, they will still be able to pay their way and keep their home.