As the eastern states grip for the yearly contest for the State of Origin title between New South Wales and Queensland, another battle which has waged for years on end is whether to buy or to continue to rent. I am confronted on a regular basis by friends who are unsure as what to do. “Mate, is now a good time to buy?” Everyone’s situation is different. Annual income, savings, whether its investment or going to be their home? What we can do is break it down for the Gen Y’s to help them see what works better for their situation.
Dead money, paying off someone else’s mortgage, whatever you call it, most people have rented a property. In a previous post I talked about the benefits of renting, paying particular focus on Victoria Park. With renting in general, it can be quite beneficial from a financial situation. The initial outlay is your bond (4 weeks rent) and the first installment (fortnightly or monthly). Far cheaper then a 10% deposit on a property. Another positive point is that you have greater choice in where you wish to reside. Having a budget of $300,000 to spend on a home really cancels anywhere of ‘coo-ee’ of the CBD or beaches but if you have a budget of $450 -$500 per week to spend on rent, the options which suburb you want to reside in greatly improve.
With the good comes the bad. Let’s face it, when you’re renting, you don’t own it. Having that sense of ownership and knowing it’s yours makes you appreciate it that little bit more. On top of that is the fact that with a market that is continually gaining, rents are only going one way? Finally, your tenancy can be terminated at a moments notice (30 – 90 days). Regardless if you have been a great tenant who pays their rent on time; it is always a lingering thought for anyone who rents.
I entitled this article which cliff to jump off? Lets face it, this is the biggest one. “The Great Australian Dream”, owning your own home, quarter acre of land with a Holden out the front. Times have changed since this was first raised in the 50’s and 60’s with urban sprawl and the demand for inner city living. But, the thought of owning your own property still remains a dream for all Gen Y’s. There is a certain notoriety for those under 30’s who own a home or an investment property. It’s a massive achievement. To be out of high school for maybe less then 10 years, get enough scratch together for a deposit and convince a bank that they should give you hundreds of thousands of dollars. Good job. Whether you purchase as an investment or your home, you are making money from day one. Over the last 12 months, the Australian real estate market has been in the spotlight with record prices being recorded throughout all metro centers.
So, we all want to buy a home and have our own slice of “The Great Australian Dream”, but why don’t we? Ahhhh, the million dollar question? The deposit. It’s tough work saving for that deposit. The median price for an apartment in Zetland for 2014 is just under $700,000. That’s a little bit more then the spare change you will find in the centre console of your car!!!
As I touched on earlier, everyone’s situation is different. Speak with people who you feel can help you make an educated decision. This article barely scratches the surface on the debate but it brings out some key factors which play on many young peoples minds. Depending on your goals and plans, if you are thinking medium to long term, buying may be the option which is better suited to you and short term, renting is the way to go. Regardless of where you sit and you take the plunge, remember to have thought this through carefully because it’s hard to go back once you have taken that step off either cliff.