- Keystart CEO Paul Graham shares his advice on renting vs buying
- Owning a home can give Australians an asset that could increase over time
- Renting relieves the pressure of saving a lot of money
During a time when property market prices are at an all time high, Keystart CEO Paul Graham said it’s important for a person to weigh up the pros and cons of their personal situation before choosing whether to rent or buy.
He said “renting can give flexibility, while owning can give stability.”
Owning your home – advantages
Owning a home gives you an asset that may increase in value over time.
“In Australia purchasing your own home is still viewed as a relatively safe long-term investment and this is a big motivation for most people,” Mr Graham said.
Also having the freedom to renovate and update is always an option when owning a home.
“Home ownership is an emotional milestone and can bring a great sense of pride and achievement.”
Owning your home – considerations
Mr Graham says that upfront costs can be the largest hurdle when thinking of purchasing a home, especially coming up with a home loan deposit.
There may be fees and charges which go along with a first home loan deposit too.
However if a first home buyer, there may be help with the First Home Owner Grant and transfer duty concessions.
Interest repayments should also be considered, especially with the chance of personal circumstances and interest rates changing.
“You need to be comfortable you will be able to afford the repayments now and should rates go up, or if you have short term changes in things like your income,” said Mr Graham.
Despite a consistent rise over the long term, there have been periods of weak growth meaning house prices can fall.
There will also be ongoing costs when it comes to owning a home such as insurance, rates, and water bills.
Mr Graham said, “it’s a good idea for homeowners to gradually contribute to and build up a modest account of savings, which can be accessed for the unexpected.”
Renting a home – advantages
Testing out different suburbs in different types of homes is something renting can give.
It can also give you more freedom when it comes to moving to different towns or cities, if you have a career or lifestyle which sees you move around.
Financially there are lower upfront costs when it comes to renting, meaning there’s less pressure to have a lot of money saved.
There is also no need to pay for maintenance, repairs, and council rates.
Renting a home – considerations
Renting can lack stability, especially with leases rarely longer than 12 months.
There’s also the risk of being asked to leave with just one month’s notice or less.
“It can be disruptive to pack up and move from your rental if you don’t have the opportunity to renew a lease, or your rent becomes unaffordable,” said Mr Graham.
With inspections and the inability to make major changes, renting can take away the feeling of home. The lack of control over rent prices can also be frustrating, he said.