# Rent or buy?



## Editor

While employment is still relatively high across Australia and the economy is still growing, there are concerns about a potential slowdown in the short to medium term. The property sector in Australia has remained relatively strong compared to its overseas counterparts which, together with a tightening of bank consumer credit arrangements, have placed many properties in Australia out of the reach of first-time buyers.

Does it make sense to rent a property in Australia today or would you rather buy?


----------



## vincentjames

I cant afford to buy now, so renting is an the only option for me


----------



## Editor

Hi Vincentjames

One of the major benefits of renting is the flexibility that this gives you. What are your views on the Australian property market as a whole?


----------



## vincentjames

Editor said:


> Hi Vincentjames
> 
> One of the major benefits of renting is the flexibility that this gives you. What are your views on the Australian property market as a whole?


I think it's getting more stronger now compare middle last year


----------



## Dexter

What a question...

If you have a choice to pay $400 per week for rent or $400 per week to repay your mortgage it is obvious that you choose the second option. Paying rent takes you nowhere in terms of getting closer to owning your own house. Repaying mortgage does take you there even if it may take years. 

Renting is good for so called "bouncers" and adventure seekers. These people never seek settling in one place but love moving from one place to another and changing jobs. They usually make quite unattractive employees for potential employers. But even many of these purchase an investment property somewhere as they are aware that one day they may grow tired of this lifestyle.


----------



## alexabda

Where can I get some information as to house pricing versus rent rates? Is there any site?


----------



## Editor

I have been looking around the Internet and found an interesting snapshot of weekly rent payments and weekly mortgage repayments across Australia.

*Adelaide*

Earlier this year the average weekly rent in Adelaide was AU$340 against the average weekly mortgage repayment of between AU$330. This was on an average mortgage of AU$241,000.

*Melbourne*

The weekly rent in Melbourne is around AU$360 against a weekly mortgage repayment of around AU$394. This is based upon an average mortgage of just over AU$288,000.

*Perth*

The average rent per week in Perth this around AU$470 which is well in excess of the average weekly mortgage payment of AU$408 based on an average mortgage of AU$298,000.

*Sydney*

The average weekly rent in Sydney is around AU$500 which compares against an average weekly mortgage payment of AU$422 - this is based upon an average mortgage of AU$308,000.

*Darwin*

Darwin is the most expensive of Australia's major cities with the average weekly rent standing at AU$650 against the average weekly mortgage repayment in Darwin of AU$401. This is based upon an average mortgage of AU$293,000.

This gives you an idea of the current situation with regards to rent v mortgages.


----------



## Dexter

And it becomes even more attractive if you overpay your mortgage a bit initially and reduce your loan base. That way your payments go down by even more. 

What about Brisbane and Gold Coast?


----------



## OttoD

*Home Loan Experts*



Editor said:


> While employment is still relatively high across Australia and the economy is still growing, there are concerns about a potential slowdown in the short to medium term. The property sector in Australia has remained relatively strong compared to its overseas counterparts which, together with a tightening of bank consumer credit arrangements, have placed many properties in Australia out of the reach of first-time buyers.
> 
> Does it make sense to rent a property in Australia today or would you rather buy?


*The market*

Taking into consideration the current economic climate, it makes sense that many people would be sitting on the fence regarding renting vs buying. 
The main factor in this decision is capital growth. There are many different pockets of the Australian real estate market and all are showing different rates of capital growth. 
Therefore, with proper research or statistics and taking into consideration your life circumstances and the suburb you want to live, an informed decision can be made.

*Your cashflow*

If you are renting and saving, this is a good indicator that you are ready to buy a property. Did you know that today financial institutions consider regular rental payments as a form of verification of savings? This provides a contrast to the common misconception "rent money is dead money".

*Your life circumstances*

If you have been renting, living in the same area for a while and plan to live there for a long time, then this is a pre-cursor to purchasing your first home. If you have the ability to save, or have assistance from a close family member in the form of a Guarantee or gift for a deposit, there are lenders which will look favourably on the right candidate as a first home buyer.

*Rent vs Buy*

An accredited mortgage broker can give you valuable information based on your own circumstances regarding the decision to rent or buy.

If you are currently renting and you manage your finances perfectly, this is a scenario where with as little as 5% deposit, you could be in your first home.

in summary, Savings/gift/Guarantour + a clean rental ledger = ticket to owning your first home!


----------



## Nomes79

Can you get 100% Mortgage in Australia?


----------



## jinw

As Nomes above, what do you guys think about companies that require a small deposit as apposed to banks from 5- 10 %


----------



## Dexter

I got 100% from a bank when I bought investment property.


----------



## Jay_Cheung

Dexter said:


> What a question...
> 
> If you have a choice to pay $400 per week for rent or $400 per week to repay your mortgage it is obvious that you choose the second option. Paying rent takes you nowhere in terms of getting closer to owning your own house. Repaying mortgage does take you there even if it may take years.
> 
> Renting is good for so called "bouncers" and adventure seekers. These people never seek settling in one place but love moving from one place to another and changing jobs. They usually make quite unattractive employees for potential employers. But even many of these purchase an investment property somewhere as they are aware that one day they may grow tired of this lifestyle.


I agree with you. Spending almost the same money per week, one option will bring a house, and the other will bring nothing.


----------



## Editor

The only real upside to renting is the freedom that this gives you to move around - perhaps looking for new employment opportunities. However, on the whole I agree that if you are settled and rent v mortgage is roughly the same (or a mortgage is less) it seems to be a no brainer in the long term?


----------



## dunan

as a MIGRANT, unless fairly cashed up...then rent..Start in shared accom where the house is fully furnished but then you might end up with people that you cannot get along with...S150/wk plus 1 month bond.....Units give you personal space...plus you can rent out other bedroom/s n recoup a lot of rent and outgoings....$400/wk plus about 1,500 bond. Unit can be furnished very cheaply by buying thru secondhand stores or garage sales. Most rentals have heating n airconditioning.

Best areas for short term rental are around universities.

Find the area you want to live in and google..eg,,houses for rent ''Clayton'' area.....plenty of choices there so no need to worry...Most agents give full details of rental incl pictures to make choice selection.

Once you settle in, get a good job then save 10% deposit and look to buy....


----------



## bmacavanza

buy is still best choice at the end of the day

check out : Real Estate, Property, Land and Homes for Sale, lease and rent - realestate.com.au


----------



## ozdev

There is so much talk in the media about a property bubble in Australia at the moment. On the other hand, there is not a huge amount of new construction - and high levels of immigration keeps the demand high, so it's very hard to know what to do


----------



## omamaamansikka

As they say - rent money is dead money. 

That being said, sometimes building up enough of a nest-egg to afford a home loan seems to be what trips people up. Min. 10% savings seems to be somewhat of an ideal when it comes to bringing up the subject of a home loan with most major financial institutions in Australia from my experience. Anyone else with a different figure?

The city-specific snapshot was interesting. I was missing Brisbane and as someone else asked, did you see what the stats were for the Gold Coast as well? (sorry if this info was presented and I missed it)


----------



## alabis

Editor, when you say an average rental pay or mortgage pay, what type of housing do you mean? In terms of location (urban, suburban), area (number of rooms), comforts (bathroom, kitchen), etc. Can ypu advise a local website for the sort of information? Thanks.


----------



## flowergirl

Owning a property is always better than paying monthly rent for one. As omamaamansikka already put it, rent money = dead money. I couldn't agree less. If you have the possibility of buying a property, I don't see why you wouldn't do it.


----------



## territorygal

Weeeeelll, there are advantages and disadvantages to doing either one, depending on what your life situation is. I don't necessarily agree that "rent money is dead money" because it isn't as if you're getting nothing. You're getting a place to stay for a certain period of time, same as if you rented a hotel room or a cottage for a week. We all need accommodation. Of course, you don't own it after you finish paying, but that may or may not be advantageous to you personally in the end. Again, it just depends.

By the way, you can't really compare a rental payment to a mortgage payment because most homeowners don't just pay mortgage, they also pay council rates and homeowner's insurance, *and* all of their utilities, *and* they're 100% on the hook to fix anything that breaks in the house. Renters may or may not pay water and sewage (we didn't for ten years), and when something breaks, the landlord usually has to fix it. So there's all these little costs that add up, too.

Aaaaand of course this assumes that the hypothetical choice even exists. For many people, it does not.


----------



## ALSI.Alex

Rent at the moment =)
if theres an opportunity with good offer why not take it. =)
then purchase =)


----------



## sooshy

hello 
thanks for the update on rent and mortgages. I am wondering about Brisbane? to secure a mortgage how much deposit is required? what are the best house loans on the market at the moment? I am looking  Thanks!


----------



## Move Migration

sooshy said:


> hello
> thanks for the update on rent and mortgages. I am wondering about Brisbane? to secure a mortgage how much deposit is required? what are the best house loans on the market at the moment? I am looking  Thanks!


Usually good to speak to a broker about that. I think the loan products in the market change quite a lot. Give these guys a call: Prince Capital Solutions


----------



## ALSI.Alex

if theres a rent to own =) would do renting to own! 
but for now.. just renting no budget for buying a good house.


----------

