The great Australian debate: to rent or buy?

January 23, 2013

Lower interest rates, easing prices and improved affordability are all positive signs for Australians considering purchasing property. In fact, these aspects can often be the tipping point for previously content tenants to consider choosing home-ownership over paying rent.

Mortgage Choice, Australia's national mortgage broker, investigates the rent versus buy equation and offers some helpful guidance to anyone considering their options in this regard.

Company spokesperson Belinda Williamson said, “With changes to government incentives for first homebuyers and weaker than expected consumer confidence around personal finances, it is not surprising that many renters have recently closed the door on the idea of home-ownership. However, those who are dedicated to the cause often find it is within reach, sooner rather than later.” 

“Making your first property purchase requires careful consideration of a range of aspects and detailed planning before you even commence the hunt, let alone think about applying for a home loan. Tenants who know their financial limitations and options are more likely to confidently leave the rental roundabout.

“Recent Mortgage Choice research shows that, for houses in most capital cities, the weekly repayments on an average home loan could be less than or only slightly more than the median weekly asking rent.

“For example, in the December quarter for a house in Darwin, Australia's most expensive capital city, the median weekly rent was $650 per week. Darwin's first homebuyers on the other hand paid only $401 per week on a 30-year average loan of $293,200***, at a basic variable interest rate of 5.9%.

“Of course, home-ownership costs such as land tax, strata fees, council rates, water consumption, insurances and maintenance need to be factored into the equation, but the small difference between rent and loan repayments within some areas is encouraging for many potential buyers.

“It is important to keep in mind that at present, there is higher than average property listings and lower than average competition between buyers. But it is a cycle, and as positive consumer sentiment grows so too will property demand, making it a good time now to do your sums. First homebuyers should explore their property and finance options carefully before making a quick decision to buy.

“If the idea of paying your own home loan instead of your landlord's is too good to refuse, then put a property purchase plan into action, get professional home loan help and make 2013 your year!”

Mortgage Choice offers the following table to provide further insight into the rent versus buy equation.  

 
* Weekly median asking rent for houses - Australian Property Monitors' December 2012 Rental Report

** Calculation based on Australian Bureau of Statistics' first homebuyer average loan size per state, principal and interest loan, basic variable interest rate of 5.9% and loan term of 30 years

*** Australian Bureau of Statistics' first homebuyer average loan size per state in November 2012

For home loan tips, trends, facts, data and other information, visit www.mortgagechoice.com.au, Facebook.com/MortgageChoice or Twitter.com/MortgageChoice. Or, call 13 MORTGAGE.

For further information or to arrange an interview, please contact:

Belinda Williamson                                                          
Mortgage Choice Corporate Affairs                                 
(02) 8907 0472 / 0407 416 124                                   
belinda.williamson@mortgagechoice.com.au

Michelle Ryan
BlueChip Communication
(02) 9018 8608 / 0404 381 886
michelle@bluechipcommunication.com.au