If you are undecided on whether to buy property or rent, then you are not alone. More than three million Australians could be renting for their lifetime, new figures show, but is this really so bad?
The great Australian dream has long been to own property – preferably bricks and mortar and a backyard big enough to kick a ball without smashing a window.
But as property prices stay perched high, this dream is being redefined because it’s simply unaffordable to many your Australians and those on lower incomes, and who don’t have the money support of older generations.
A new survey of 2,006 Australians, commissioned by financial product comparison website finder.com.au has found that 47 per cent of renters say they would consider renting for a lifetime as house prices keep rising.
The same survey also found that while 57 per cent of survey respondents had got a foothold in the property market and lived in their own home, the other 43 per cent were renting.
Renting over the long-term is not a new story in other parts of the world, particularly Europe where rental agreements can be locked in for five, ten years to 15 years.
The top five pros and cons of renting property.
1. Let’s face it, you’re not locked into a home loan
2. You don’t have the same maintenance and repair costs as property owners
3. You have less property stress because you have flexibility to relocate and are not as emotionally attached to a property.
4. You’re not as exposed to fluctuations in property prices
5. The biggest downsides are paying off somebody else’s mortgage and you can’t build equity in the property you are renting.
The pros and cons of buying
1. There’s always the potential to suffer a loss if property prices drop or if you can’t find a tenant
2. There are higher upfront costs and regularly utility bills and maintenance costs.
3. You do however have the potential to build equity in your home.
4. There are potential tax benefits attached to housing ownership.
5. You have more creative freedom to decorate and add value to your property
But property ownership, even in a low interest rate environment can costs a lot of money, particularly if you want to live in popular areas of high employment.
“The margin between homeownership and renting is narrowing, and there may come a time when there are more renters than owner occupiers in this country,” says Bessie Hassan, spokesperson at finder.com.au.
Ms Hassan says there is a growing number of Australians who will still be renting in retirement.
“More than 3.6 million Australians are resigned to the fact that they will rent forever – it is much more affordable for them when all the costs of owning a property are factored in.”
More than half (55 per cent) of male renters said they would consider renting for life compared to only 40 per cent of women.
Following that trend, women renters (54 per cent) were more likely to be saving for a deposit while renting – compared to just 37 per cent of men.
More male renters (8 per cent) were renting but also own a property (‘rentvesting’), compared to only 6 per cent of female renters.
The survey also found that 78 per cent of baby boomers who are currently renting believe they will rent until the end, compared to generation X at 53 per cent and generation Y 33 per cent.
Almost two out of three 61 per cent of generation Y renters were saving for a house deposit, compared to 38 per cent of generation X and 14 per cent of baby boomers.
Generation X respondents were most likely to own a property while renting at 8 per cent.