Should You Rent Or Buy?
2023 was a tumultuous year that saw rapid changes to Australia’s real estate market, with rising interest rates sending mortgage repayments – and subsequently rental prices – soaring. Home prices are now significantly higher than they were pre-pandemic, and with property prices set to rise to 7% across the nation in 2024, some are at a crossroads.
For those who are in a position where they can consider whether to rent or buy, both options present several advantages. From the flexibility and relatively little commitment experienced in renting, compared to the stability and long-term financial benefits offered by purchasing a property, it can be difficult to choose.
If you are considering whether to rent or buy, we’ll be exploring the pros and cons of both to shed light on property as we look towards 2024.
Renting Property In Australia
From flexibility and less responsibility to no need for a substantial deposit, renting presents several advantages. However, there are some drawbacks. Here is everything you need to know about renting property in Australia.
Flexibility
One of the primary attractions of renting in Australia is the flexibility it offers, as renters have the freedom to choose their living arrangements without the long-term commitment that a home loan demands. For those who value mobility for career opportunities, lifestyle changes, or personal preferences, this flexibility can be highly beneficial. Renters have the luxury of living in different suburbs and housing styles without the financial and emotional commitment that comes with homeownership.
Less Responsibility
Compared to owning a home, renting has substantially fewer responsibilities. In most cases, maintenance issues, repairs, and property management are the responsibility of landlords, which leaves renters to enjoy a hassle-free living experience without the stress of property upkeep. For those who don’t want to bear the responsibility of maintenance or the costs of expensive housing-related repairs, renting can be a much better solution.
No Deposit
One of the most significant barriers to entry into the real estate market is the substantial deposit required when purchasing a home. With property prices continuing to climb, saving up for a large enough deposit can be a near-impossible task for many individuals and families. As rental properties eliminate the need for a hefty upfront payment, it makes it a far more accessible option for those who may not have substantial savings. Additionally, it allows renters to save for other goals including holidays and retirement.
Disadvantages Of Renting
When looking to rent or buy renting offers flexibility and freedom from certain responsibilities, but it isn’t without drawbacks. First of all, rent payments do not contribute to ownership or equity in the property, and for many, this can be seen as “wasted money”. Renting can be a valuable endeavour, and paired with the right investments, can be more profitable than purchasing a house, however, this isn’t always the case, and it guarantees no future returns. Additionally, renters are subject to the condition of the rental market, making them susceptible to rent increases or the possibility of having to unexpectedly vacate the premises. For some, the lack of customisation options can prevent a house from feeling like a home, and this is the case for many renters who have limitations on personalising their properties.
Buying Property In Australia
Buying a property offers stability and the chance to build equity, as well as providing the freedom of owning a property, however, just like with renting, there are some drawbacks. Here is everything you need to know about buying a property in Australia.
Stability
Whilst renting offers flexibility and reduced responsibilities, buying a home provides a sense of stability that cannot be achieved when renting. Although homeowners with home loans are subject to interest rate rises that can affect repayments, their home is their home. For families, this can be particularly valuable as it means that children wouldn’t be uprooted and potentially have to move schools if the landlord were to unexpectedly request the property be vacated.
Financial Benefits
One of the primary reasons individuals choose to buy rather than rent is the potential for long-term financial benefits. When renting, the monthly payments contribute solely to the landlord’s income, with no return on investment for the tenant. In contrast, homeownership allows individuals to invest in an asset that historically appreciates, and thanks to equity being built over the course of repaying a mortgage, this asset can provide financial security and opportunities for future investments or even funding education and retirement. Unlike a rental property, when a home loan is fully paid off, homeowners can enjoy the perks of full ownership and no further monthly payments.
Customisation
Purchasing a home gives buyers a world of opportunities that aren’t always available to renters. Whether this is personalising or customising living space, renovating, or starting from scratch, owning a home gives buyers the chance to explore all options.
Downside Of Buying
When weighing up whether to rent or buy, homeownership holds undeniable appeal, but it is not without drawbacks. When purchasing a home, there are substantial upfront costs involved, from a deposit, to stamp duty, closing costs, as well as the possibility of maintenance-related costs, all of which pose a significant financial barrier. As we’ve seen in 2023, fluctuations in interest rates can have a significant impact on homeowners with home loans, drastically affecting the cost of living. In addition to the responsibility associated with homeownership, there is also a lot less flexibility, and selling a property is not always easy.
Renting and buying both present several advantages and disadvantages, however, it ultimately depends on the individual circumstances of each individual. If you’re looking to rent or buy and need some advice, get in touch with the team at Rose & Jones. We have a wealth of experience and can help you to find the right property for you.
About Rose & Jones
Rose & Jones has been helping clients find and purchase properties in Sydney, Brisbane, and the Northern Rivers since 1998. A renowned property buyers agency across residential, commercial and industrial sectors, every one of our property experts meets our high standards, so you won’t have to compromise yours. With access to a wide network of off-market properties, our team can help you find the perfect property. Also offering property management services and investment advice, make Rose & Jones your go-to when it comes to real estate in New South Wales and Queensland.
