7 Ways Renting Beats Buying
The baby boom generation all shared a dream. Whether it be in the country or in the city, they all dreamt of having their own property.
However today’s generation no longer share this dream. Instead, renting has become more popular. At a surface level this appears to be yet another foolish trend that robs someone of their long-term stability. Yet if we look at things from the mindset of people in this generation, we can begin to understand the different ways in which renting is better than buying.
And let’s be honest, they do have a point…
1. Renting could be cheaper….even in the long run!
In today’s world, property prices are ridiculously high. By association, the burden of repaying the mortgage is incredibly immense.
The situation of the ever-increasing cost of housing prices have become so bad that according to a study conducted by the Reserve Bank of Australia, should there be even the smallest dip in the rate of housing price growth, renting will become the financially more viable option.
In fact, the price of your home must rise at the same rate as it did in the past sixty years in order for you to better off than renters. Even then, the only way to reap the value of your house would be to sell it. Frankly that is something most people are reluctant to do. Hence, not many are able to realise their profits.
2. Renting makes moving easier
If there is anything you dislike about your house, you can easily move to a new place. Yet if you owned a house, there are more financial dilemmas that you need to consider and weigh up. For example, should you sell your house now or hold on to it for a while longer? If you don’t sell it now, would you be able to afford to take out a further loan to buy a new place? There is also the additional pressure of having to find a buyer for your home.
These questions need not arise when you’re renting a place.
You only have the cost of the rent, the location and the amenities provided to think of. If there is anything you’re unhappy with (e.g: the lack of a swimming pool), you could always rent a new home – one that comes with a pool. Problem solved!
3. Renting is filled with endless possibilities
The flexibility that comes with renting is undeniably one of its most attractive qualities. With renting, it becomes possible to live in a district that you could otherwise not afford.
Alternatively if your job or family situation changes, you can also very easily move closer to work or to a bigger house that can accommodate new family members. Being able to change accommodation so easily is potentially one of the biggest perks for those who hate routine and being stuck in a rut.
4. Renting is more affordable
Things have changed a lot compared to previous generations.
With interest rates at an all-time low, it will take today’s generation a lot longer to save up the same amount of money that their parents would have. This also explains why first time home buyers are, on average, older than those fifty years ago.
You may now be wondering, well if you cannot afford a house in the city, why not just move to the suburbs? The reason is not so simple.
In the past buying a home in the suburbs would have been most obvious option simply because of lower housing prices. However people in the past often had the same job their entire life. Today, most people will change their jobs multiple times during their working life because the rewards that come with being a life-long employee are no longer as valuable.
If one was to change their job and work instead in the city, they will need to spend more time commuting to work. In the past, the lack of cars meant that driving to work from the suburbs was quite easy. However the popularity of cars means that traffic congestion is to be expected during rush hours, wasting both time and fuel.
5. You don’t have to invest in property
Many people buy a house because it is seen as a dependable investment. However a house is not the only investment you can have, there are many other things you can choose to invest in that can ultimately generate more profit!
With renting, you do not have to pay the mortgage, leaving you with spare cash to invest in things like superannuation or shares. If you choose wisely, these investments can generate more profit than a property investment could! According to the Australian Bureau of Statistics, the average price of a house has increased to 64 per cent, but so has the Australian share market by 60 per cent!
Renting also means that there is also less pressure to part with a large amount of cash in a short amount of time – something that is particularly hard to do when you are starting a family and need that extra layer of protection.
Another aspect to consider is that houses depreciate over time and require regular maintenance and repair. Of course, land prices are constantly on the rise due to increasing demand. But buying a house also means more financial responsibility – paying stamp duty, repair fees etc.
6. Maintenance is no longer your problem
Renting a house means that the responsibility of keeping your house in its prime is passed on to your landlord who will look after everything for you. So instead of keeping the numbers of the plumber, electrician and handyman; you only need the number of your landlord.
In addition, most rental fees cover the cost of utilities which translates into you not having to worry about fluctuating utilities cost that is extremely difficult to budget for.
7. Renting is a lot easier to budget for
Property values go up and down, which affects the amount of property tax and mortgage that a homeowner pays. Hence during times of financial crisis, homeowners have a much more difficult time keeping up with all their payments.
On the other hand, renters are not affected since rental fees are agreed beforehand. Thus if the landlord does decide to increase rental fees, they will need to give you enough notice beforehand and it will be at the end of your rental period. And if the cost does not tickle your fancy, you could always find a new home.
So in summary, yes, you can say that the essential difference between buying and renting all boils down to money. And it seems that financially speaking, renting is a lot easier to cater for than buying.