While it’s always seemed a ‘no brainer’ that Australians like to own their home, a savvy market is now weighing up the options when it comes to deciding whether to rent or buy.
Director of the ResCom Group, Robert Findlay says that Australian investors have never been smarter or more discerning.
“There are so many different variables these days,” he says.
“Money markets are more volatile, people tend to be more demanding in what they want and expectations have never been higher. What it all means is that you should really sit down and do your homework when you are deciding if you want to rent a home or buy one.”
The benefits of renting, explains Robert, are that you have more flexibility to move and live in different locations, and you don’t have to worry about things like maintenance or repairs.
“But,” he adds, “many of us still like the idea of owning the roof our heads.”
“Aside from the emotional and physical security, saving to get on the property ladder actually makes good financial sense. Owning your own home can be a very strong foundation for improving your overall financial position.” (See the story on other benefits of property investment by Brad Matthews in article 2)
As far as the monthly outlay is concerned, many renters now actually pay rents which may be comparable to or even higher than a mortgage repayment. Plus, as rent can rise each year, mortgage payments will be reduced by inflation. Interest on your loan will decrease as you pay off more of the principal amount you have borrowed.
The government also treats the family home favourably when it to pensions and tax.
“Currently when you retire, the value of the family home isn’t factored in when determining a pension,” says Robert. “And, unlike some other investments, as long as you live in your home for 12 months, any profits you make on its sale won’t attract Capital Gains Tax.”
He adds that people shouldn’t be frightened by the costs to buy.
“You can borrow up to 95 to 100 per cent of the total property price these days – you don’t necessarily need to have 20 per cent saved as a deposit or a lazy $30,000 for Stamp Duty. At ResCom, we have the finance experts who can sit down with you and work the sums.”
Robert Findlay says that the message to Australians interested in property is clear.
“When it comes time to decide if you want to rent or buy, there are a whole range of physical, emotional and financial options to consider,” he adds.
“Make sure you really consider all of the angles and don’t be afraid to get professional help if you are at all unsure. Each case is different but you still need to do the homework.”