As first homebuyers find it increasingly difficult to break into the housing market, many are wondering if they would be better off renting and investing their money elsewhere.
Renting can have its advantages
There’s no denying that renting is the cheaper short-term option, instead of having to cough up payments for stamp duty, insurance and various other fees and costs, all you usually need is enough funds to pay for bond and two weeks rent.
Renting also gives people the opportunity to live in upmarket areas that they would probably have no chance of affording if they were looking to buy. Renting in a trendy, inner-city location is still very viable on a lot of budgets; however buying in the same areas is often quite difficult.
The flexibility of renting is another aspect that makes it appealing to some. You’re free to move when your lease is up, allowing you to move easily if you change jobs or want to go travelling. Or if you need to find a bigger place it’s much easier to just move onto a bigger rental, rather than worrying about selling and buying somewhere new.
But how do renters fare long-term?
The biggest issue with renting is the long-term financial consequences, particularly if you aren’t saving and investing your money while you rent.
There’s nothing to say that buying is necessarily a better financial strategy than renting, however it does force people to put away money, and it gives them the security of knowing that one day they will own the walls around them and won’t need to continue making payments to live there.
Renting doesn’t offer the same kind of stability as home ownership and those who rent until they retire are likely to find themselves in a very difficult position if they haven’t made some other kind of investment.
Regardless of whether you decide to buy or rent, the most important thing is that you save and plan for your financial future. In some cases renting makes more sense, or is the only option available. But there’s no denying that buying can provide long term financial security and is a smart investment choice for many.