Buying vs Renting

Posted by Jack Guthrie

Today we look at the buying vs renting argument and how it’s changed with the growth of our property markets. Over the last 10 years, house prices have grown strongly, particularly in Sydney and Melbourne, leaving first home buyers with a significant challenge as they aim to save enough money to enter the market. They can either stay at home with Mum and Dad, late into their 20’s to save for a house deposit or look at an alternative way of creating wealth.

Naturally, the younger generation is attracted to the notion of flying the coop and having their own independence. Many are struggling to rationalise the price tag of a house deposit in our capital cities. Even more disheartening is the fact that the feasible suburbs for first home buyers, are often in less than appealing locations. As a result, there is a growing prevalence of buyers opting to rent for a lesser monthly cost, while creating wealth through property. After growing in popularity, the trend has led to the emergence of a demographic known as the “rentvestor”.

This comes off the back of research conducted by the ABS and CoreLogic, outlining the falling rate of owner occupiers throughout Australia. As housing prices in our capital city’s have risen and lending has become increasingly stringent over the last 24 months, first home buyers are a taking a different path to home ownership. To portray this better please see the below infographic. Aaron and Kristy chose to take the original route to home ownership, while Rachel and Liam chose to rent and buy in an alternate market.

So, in light of the above scenario, why don’t people rent? What is holding them back?

The most common fear and misconception about renting comes from the age-old concept that “Rent money, is dead money”. This has been passed down from past generations that were focused on getting a job, getting married and getting a 30-year home loan. The Australian dream, as many called it, was centralised around owning a home on a quarter acre block with a mortgage. In reality, renting while leveraging property in strong growth areas can be a cheaper alternative to enter the property market. Reflected in the above scenario, many are now opting to invest smartly with their money and rent in the suburb they have always wanted to live. To view more on the subject, click here.

Leveraging off the property market is a powerful way to create wealth. At Blue Wealth we aim to provide our clients with better opportunities, now and in the future. This can be the result of forward thinking, or by just taking an alternate path.

Posted by Jack Guthrie, on 28th Aug 2018