Renting vs. Buying
Andrew Drane
Managing Director/Principal (Ray White Seven Hills), Chief Auctioneer & Author of 'Real Estate for Real Reasons'
We’ve all heard the old argument: rent is “dead money”. As long as you rent, you’re throwing your hard-earned into a void, a black hole. You are going nowhere. Purchasing a property is an investment in your future.
Looking at renting from one angle only, I can see the logic of these arguments. But renting has many advantages that are often not discussed. Home ownership might be the “Australian dream”, but Aussies have many other aspirations, and not all of these will be fulfilled by having a 30-year mortgage.
Let’s have a look at renting, and the way it can satisfy the expectations of the “Aussie way of life”:
1. When you rent, you can live anywhere you like. For those of us who like to live for today and enjoy their lifestyle, renting gives us flexibility and mobility. You might need to compromise on the size of your apartment, or the number of people you live with if you rent a house, but if you really want to wake up every morning in Brighton or Vaucluse, you’d be willing to make those compromises. Many do it, and they love it!
2. The upside of not owning a property is that you actually save a lot more money for your future if you rent. It’s been said that you can save up to three times the amount of money renting than you would if you were paying off a mortgage. For a start, maintenance of the home is not your concern. That expense alone is ongoing, and often increases with the years. Not only that, but the average rent payment compared with that of mortgages these days is significantly lower, and again, depending on the compromises you want to make, it can be as low as you like.
3. When you rent, you actually have a greater capacity to save, which means greater choice later in life while you still get the lifestyle you want right now. Studies by accounting firms have shown that even over a ten-year period, renters are able to save tens, sometimes hundreds (in wealthier income groups) of thousands of dollars more than home owners. That deposit that looks so far out of range is a lot easier to amass for the diligent renter.
Home ownership has a lot of certainties about it, no doubt, but the lifestyle flexibilities renting affords should never be underestimated. It’s all a matter of what you want in life, and only you can answer that. The important thing is that your decision shouldn’t be influenced by bogus arguments based on an incomplete picture.