Everyone has different circumstances i agree with that.
But I have several workmates who still rent their housing and they are in their 40's and one in his 50's
I got talking about this to one of them during lunch break who told me him and his wife still rent as they preferred to go on holidays.
I often wonder what went wrong ..isnt first priority to pay off a house rather than go overseas?
I'm paying 760 for strata per quarter and my unit isn't even that nice… renters downstairs smoke, cig butts thrown on the ground from the balcony, there is vandalism and grafitti on the walls.
geez that makes my $270 a quarter (220 Strata, 50 sinking fund)
seem delightful
I dont mind paying it though, It includes the Building Insurance and maintaining the common ground.
although when I was looking there was a sweet unit in CBD, until I was doing the maths on $1080 per quarter for Strata no wonder they couldnt sell it…
Strata, tenant broke the garage door by reversing a 4WD to it, repairs, dodgy property management agent incorrectly calculated the rent amount collected, hence underpaid me (but never miscalculate the management fee). Dodgy CommInsure making up excuses not to pay for roof leaks.
Bought the property 9 years ago, hasn't really increased money that much.
The amount I pay in strata would horrify most on this forum…
$1,800 per QUARTER, calculating to $7,200 per year.
Do I 'enjoy' paying this amount? Of course not, but I am prepared to pay it because I still come out ahead when I balance these costs against the associated benefits.
No i dont enjoy paying Strata fees plus tje Council Rates plus water rates etc…but its better than paying rent
You never answered the question about children!!!
The answer is clearly 'no kids'. So really, it's not that remarkable that star-d managed to pay off an apartment (they're cheaper than houses, cause you get no land, among other reasons) over about ten years, that was bought at the prices they were going for over a decade ago, while earning >60K per year. That would be pretty easy, with no dependents!
Personally, I'd prefer to take 20 years to pay off an actual house; you end up with land, there's no high ongoing body corporate-type fees or shared costs or shite regulations cramping your style/decisions, neighbours aren't a thin wall away on all sides, you get a personal garden, etc.
Also, if the choices were renting and having kids, or buying and having no kids, I'd take the former any day. My kids have brought me more joy than anything else in my life, and I consider raising them them (so far; they're not grown up yet!) my greatest achievement. Many, if not the majority of parents would feel the same way I'd hazard a guess.
Go Directly to Go, Collect your $200.
Exactly.
So to summarize your rant diplomatically - Different strokes for different folks.
@ssa02:
Erm… no. There was a bit more intended by it than just that; particularly with reference to the 'rant' that it was in response to.
"but its better than paying rent"
You realise that interest repayments are just the same as rent. A loan is a rental on cash. A unit rental is a rental on space. No different. Oh but you'll next say "but at least the money goes towards something that's mine"… no, only the portion that isn't an interest repayment does that, and I sure as hell bet most renters can save and invest at least an equivalent to the portion of the "debt rental" you pay which actually reduces the principle of the loan.
I agree, in principal ;)
If I put more money in my offset account, the interest I pay on my mortgage is less. However if someone were to put more money into a savings account, the amount of rent would not be less.
If the house goes up in value, then I have earnt money on my investment when I sell it.
"However if someone were to put more money into a savings account, the amount of rent would not be less."
This statement is completely incorrect. Keywords: Opportunity Cost. The person who invests their money will have effectively reduced their rent by the returns they made on investing that money. You have to net out all cashflows to know your final position.
This notion Australians have that buying houses is the only way to make money can't die soon enough.
Do they complain about renting because they can't afford to buy or do they choose to rent?
There are some pretty sweet upsides to renting, such as mobility and not having to do any maintenance. Also there is that added bonus of being debt free and holding a more diverse range of investments.
My husband and I have a net worth (ex super) equivalent to about a 40% deposit (depending on the day, maybe not so much after the last couple of days haha) on a place similar to where we rent atm but we choose not to buy. There are many reasons - we want to be able to leave this city and never return, our housing needs will change in a couple of years anyway, it is fun to baffle people by doing the opposite of conventional wisdom ;), etc
Even with today's super low interest rates, at least where I live, there is a huge leap in expenses from paying rent to paying mortgage (which alone is higher than rent) + strata + rates + water + home insurance + maintenance. By renting we can afford those overseas holidays AND continue to save and invest for the future. Eventually that will involve buying, probably once we are ready to settle somewhere more permanent and breed some more humans.
Eh, maybe if we had bought 5 years ago we'd have placed higher in the home ownership race, but if we are still on track to fund our own diaper changes in old age, I don't see what it matters to anyone else?
My expenses have gone down since buying. Rent on a similar house was $430/week. Interest on what's left on our loan after 3 years is $1300/month. Rates, utilities, and insurance bring the costs closer together, but I'm surprised at how quickly the sums changed. We also have the benefit of making cost reducing changes to our house - like solar electricity.
Don't forget to factor in the opportunity cost of lost return on the equity you have in the house. If you own a $1m house outright you could say you have no expense but if you could otherwise have earned 4% then it has cost you $40k per year. Yes you would then need to factor in capital gain etc, but just thought the point was worth making.
I know a guy who chose to invest in commercial property and rent instead of the traditional own-your-own-home way. He's done very well for himself. He's in his mid-60's now and just bought a little house with his fiancé as he wants to make sure she'll be ok if he kicks the bucket suddenly (second time round for both of them so bulk of his money will go to kids, but she doesn't have a lot so would end up homeless and unable to cover the rent if they kept doing what he'd been doing all those years). It's worked well for him to ignore what he 'should' do.
I don't think I ever want to buy a house (while I have no SO/children). I much prefer the freedom of moving when I'm sick of the area I live in. To look down on people who choose to rent or are unable to buy a house is ridiculous. Do you really ridicule people based on what you feel is the social norm in buying a house and traveling? Not everyone is a conformist.
My friend in his 50s still has a old Nokia feature phone and uses prepaid aldi Sim in it. And, I have the latest iPhone bought outright and on a $70 unlimited plan.
I am sure he is got his priorities wrong.
P.S: Sarcasm! (have to mention for people who have their head buried in sand)
Somebody needs to invest a sarcasm font.
I'd invent in something like that ;)
Hahahaha. Took me a minute. Can you tell I work in finance?!?!?
With most property investors happy to negatively gear, you can usually afford to rent a better place than you could buy. Even with a 20%+ deposit, our monthly payments on the place we rent would jump 50-75% if we were repaying a mortgage instead of renting based on current property values.
I rent but I also own property which is rented out.
Rent money is dead money as they say. But actually so is interest on the mortgage. Any property that is negatively geared (or that would be negatively geared if you took out a mortgage and put tenants in) is cheaper to rent than buy, however the renter does miss out on the capital growth of the property value so it's still better to buy as prices usually increase in the long term.
It is way cheaper to rent the particular place I am in than to buy it. At the same time, it is cheaper to own than to rent the places I own. The place I rent as a residence is way better than the places I own.
My own personal opinion is that renters have now missed the home ownership boat. House prices have gone through the roof (especially in Sydney) and it seems that the only people that can afford them are investors and DINKs (Dual Income, No Kids). There is a rather large divide in assets between home owners and renters.
I place the fault squarely on negative gearing and capital gains tax concessions.
Will the market crash?
Market crash speculation is only discouraging new investors. I don't think any seasoned investors actually speculate at all - mainly because they are boned if it does crash (and they are powerless to do anything anyway)
It crashed big time in lots of other countries due to GFC. Some places decreased by 90%.
@inherentchoice: Am curious as to where property prices crashed 90% due to the GFC - care to elaborate?
@YTW:
Cleveland and Columbus in Ohio USA. Also in Kentucky and Alabama. Since crashing there has been a recovery in the market in most US states, but still they are not back to pre GFC levels.
@inherentchoice: 90% in an entire city? Or in a small pocket of a city? Any links to verify? I was in the US throughout the GFC and don't recall widespread 90% property price crashes.
Also, the US market is not comparable to Australia. In the US, if you can't pay your mortgage and the bank forecloses on your loan, you hand the bank the keys and you're done - no further obligations. In Australia, if you lose your house but the proceeds aren't sufficient to repay your loan, you still owe the bank. That means that homeowners here are more likely to prioritise repayment of the home loan rather than suffer a forced sale. This reduces the likelihood of a flood of foreclosed properties driving down the market.
"In the US, if you can't pay your mortgage and the bank forecloses on your loan, you hand the bank the keys and you're done - no further obligations."
This is wrong. There's only a handful of US states that have non-recourse home loans, the vast majority are full recourse.
And look at Ireland, they have just about the harshest bankruptcy laws in the world - you can go to jail for failing to repay your loan there. It still did nothing to prevent their spectacular housing crash.
@arescarti42: This is the common fallacy which Australian property spruikers resort to, to make the claim that "we are different to the rest of the world" and that "it will never happen here". Our day of reckoning will come one way or the other and it will be interesting to see what new innovative plan the gov will formulate to bail out the property and banking sector.
Sounds like Hockey and co are already laying down the foundations for the next bailout by letting FHB's dip into their super to buy their first house. I hear the best way to fix a broken heavily indebted system is with more debt, what could possibly go wrong?
In the US, if you can't pay your mortgage and the bank forecloses on your loan, you hand the bank the keys and you're done - no further obligations.
Very interesting! Is that the law, or simply the way loan contracts have traditionally been written in the US? Tending towards the former, as not much bargaining power with banks. Wouldn't it mean that banks would be reluctant to foreclose unless there was equity (the opposite of your final point)?
EDIT
Never mind, I read arescarti42's post, which seems more likely to be the case.
@strangeloops66:
Re this, s-loops:
"In the US, if you can't pay your mortgage and the bank forecloses on your loan, you hand the bank the keys and you're done - no further obligations."
That certainly was exactly the way it was prior to the (relatively) recent GFC; and it's pretty obvious that this policy contributed to the GFC (recall all the 'sub-prime mortgages' shite etc; not sommat that would even be possible under the Australian system/regulations). Not sure if that still is the case, or if things have changed somewhat in this respect in the USA, post-GFC. I'd hope they have changed. Lending money to peeps for real-estate when you know they cannae pay it back is of course a recipe for disaster. Doing so 'en masse' is (of course) a recipe for baking up an entire 'false economy'…
@hayne:
This is absolutely right. At least it was the case pre-"GFC". Perhaps the US or some states thereof have changed things since then?
It always does.. you just have to watch it.
Right now though it looks like it just keeps on rising… with no end in sight.. crazy huh.. I guess it supports the idea of constant renting a lot because no body wants to put down that amount of money on a single one stop stationary house these days.. unless maybe if they got kids.. or babies..
here a melbourne property median house price vs average wage from 1965 to 2013 courtesy of wikipedia.
if you will look at the graph.. house prices hit a low in the 60s never going above 3 times the average wage then had a small boom between the early 70s to the early 80s a decade of higher prices.. then went just below in 1983.. then bam gg something happened in 1983.. and it went skyrocket from there on my guess is babies or some sort of income rush but who knows.. probably one of the older or more well informed/learned folk can chime in here now.. another way to look at it is this graph:
Sydney Nominal House Price Index (March 1998 = 100)
http://www.macrobusiness.com.au/wp-content/uploads/2011/08/w…
This one IMO is better (well for me at least) because it is specifically for Sydney.
Source: www.macrobusiness.com.au - ABS
From this we can gather that since 1998 house prices have gone up to over 2.5 times their 1998 cost in more recent times.. remember graph only goes up to 2011 march so 4 years ago roughly.
Now I forget where I saw this from but some guy did a projection of income growth over time per year yada yada and saw that the next dip from 1983 was 2023.. 8 years from now but uh I checked it out further and it was sort of not really helpful and the data was kind of bogus but anyways.. I think well my guess is the next dip will be in either 2025 or somewhere near the early 2030s.. ikr a long long time away.. but hehe anyways that's just my guess. I honestly haven't done much research on the subject and only started today lol.. and truthfully to be honest.. anything can happen.. so the best thing for us to do now is just to earn a bit of some extra money on side projects and jobs etc.. e.g. make a game.. write a book.. do some extra helpful tasks on freelancer/airtasker etc or just pick up a second weekly job if you can. Life is sometimes weird and strange that way.. but heh anyways I hope this helped man all the best
I don't get why people don't want house prices to go up. When I was a kid, my parents spoke of their missed opportunities to buy property but it was now too expensive (in the 70s!) If populations are going to increase the the available land isn't, values will rise.
I just got a notice from the council that they've increased their valuation on the land under our house (presumably to justify higher rates), but I don't think that had anything to do with negative gearing or capital gains concessions.
The average Australian could afford a 2 bedroom home in the suburbs, but they don't build those coz everyone wants 4 bedrooms with double lock up garage.
Buying a house is very expensive. You could do better renting. I think somebody above mentions they do. Somebody convinced Australia that everyone needs to own their own home. We were also called the lucky country. Maybe our luck's just run out and we can't have a socialist society.
Increased house prices does nothing to help average owners, it only helps investors and people downsizing.
If you live in a house, you have one house, it doesn't matter if that house is worth $50k or $5M. If you sell it then you're going to need another house - so you're going to have to spend roughly the same amount; you can't just sell your house and be homeless. The only people who benefit are people who had excess houses to start with. They gain at the expense of people wanting to buy a house to live in. [I am ignoring rent in this scenario because rent is normally reasonably coupled to house prices].
Yes, but if you buy what you can afford and pay it off, you are in a better place with the 300k property that is now worth 400k - to look at the 600k property you have always wanted (as opposed to starting with the 600k property).
It is about buying what you can afford, not buying what you want
You've missed the point.
If prices go up by a third, causing your 300k property to go up to 400k, then the 600k property you want is now an 800k property. If your goal is the second property, then you're actually in a much worse position if prices do rise, because you now need to earn an additional 400k (800k minus 400k) to buy and pay off the second property, whereas if prices hadn't changed, you'd only need to pay off an additional 200k (600k minus 400k).
As macrocephalic says, rising prices are only good for investors and downsizers, they work against both first time buyers, and upgraders.
@arescarti42: Sadly without a culling of people, the house prices may just keep going up. There is only a limited amount of people you can fit in a certain area, unless we start developing subterranean.
Yes there will most likely be a time in the next few years which the property prices may drop, however I wouldn't expect it to drop like 50% or more back to the 1990's prices. The most it will prob drop is like 10% which is alot, however most properties already being so high, it will still be out of reach.
Hence why if people stop wanting to live so close to the city, usually places outside of the 40KM radius of the CBD becomes affordable for the first home owners.
@arescarti42: I suppose my point is that whilst you are buying the cheaper you can pay it off quicker etc. Therefore allowing yourself a chance to get the better property as you aren't spending all your money on interest.
@arescarti42:
No, this analysis is wrong. Assuming that the purchaser saved a 20% deposit for the 300k property (to avoid mortgage insurance) and he can service a large loan, he can now buy the 800k property after property prices increase.
So, if he had put in 20% for the original property, he would have had 60k equity originally. When the property appreciates to 400k, then he suddenly has 160k equity. Great. Sell that property, liquidate that 160k equity, and now you have a 20% deposit for an 800k purchase.
As an owner occupier, you don't even pay tax on that 100k you just made!
Its all about leveraging and works well so long as the banks lend you the money, you have income stream (job) that can pay at least the interest, and property prices don't go down.
negative gearing and CGT concessions have been around a lot longer than say… FHOGs and stamp duty exemptions ;)
Gov should stop introducing in new incentives and let the market sort itself out.
and who made u a judge?
We bought our place here in Sydney 10 years ago and recently paid it off. While it feels great not having to owe money to the banks, our property does act as an anchor for us which may not be a bad thing for some but my wife and I have been thinking about moving overseas and we constantly have to think about what to do with our place. It's great to have options (rent it out or sell it and invest the money) but if we didn't own our place, it would be a much easier decision to pack our bags and leave.
Don't get me wrong, I'd rather we did this than rented. It's not so much because we had a dream of owning our own home, more because we didn't want anyone to be able to make us move whenever they felt like. But I'm just saying that there are pros and cons to each decision. Sometimes for some people it's better to rent, other times it's better to buy.
If I didn't already have a place today though, I don't think I'd buy. I thought it was pricey when we bought 10 years ago but prices have gone bananas.
Rent it out and go overseas and buy another place. Then if you decide to move again, rent that one out too.
Then if you decide to go back to any of those places, at least you will have a holiday house there!
Unless you absolutely have to live in an overpriced city like Sydney after you retire, renting is not that bad as long as you have some savings later in life. There's lots of lower cost towns across Oz and NZ you can move to when you retire.
I once met a man in his 50s who sold his house and all assets and choose to travel around the world.
It seems unreasonable to me at first but later I realized that different people just have different priority, nothing wrong with that.
Some people (myself inclusive) put having their own property as a first priority but others may just prefer renting and do what they really want to.
In the end, as long as they are happy, that's the most important.
How many places in the world have you been to ?
rent=spend less, invest more
buy and rent=negative geared for longterm profit & capital gains
simple… super can be used now to invest in property, with NON RECOURSE LOANS
and you can save paying others to MANAGE YOUR MONEY
Sadly I know of quite a lot of people who rent and actually spend more.
Not sure if its just the culture in Australia, but I do notice that quite a lot of people don't understand the concept of investment but they sure know the concept of tobacco and alcohol though.
Gina?
Please advise of a non recourse loan for SMSF?
I am a lender and haven't heard of such a thing, you are required to provide an individual guarantee to the loan limit however not liable for excess as it would be considered as additional contribution to the fund itself.
If a SMSF loan falls under, believe me it will be called upon.
The loans offered to SMSFs are non-recourse against the trust's assets.
Some lenders may seek a separate individual guarantee, but the lenders have no recourse over the other assets of the SMSF by law.
If you are a lender seeking recourse for assets held in the fund in addition to the mortgaged property you are acting illegally, and I believe you will be unable to collect if there is a default.
This very issue was raised just days ago. Talk of making your super more accessible, to buy a house for example.
And as one commentator (forget who) noted, it will have the same affect as doubling the first home-owners grant or slashing Stamp Duty — prices will rise.
The market will say "Ohh, you've now got money to spend eh? Well, bend over!"
The solution is that of supply. Until this is addressed, this pitiful cycle remains just another "problem". More broken promises from pollies without the political will; blame the States, blame the previous Govt, kick it down the road (eg capital gains exemption/negative-gearing).
As for the poor punters, it will continue to steamroll some and exclude others.
I met someone on a cruise who was retired and spent all of his time cruising, because it was cheap (return cruiser so he got discounts… when I was on the cruise he was on something like his 120th cruise!). He said he got to wake up in a new place every day, all his food and entertainment was provided, his room was cleaned and he was always meeting new people. For some of these cruises it would be way cheaper for everything all included instead of paying rent on a property.
Without renters investors would have nothing, without investors there would be no rental properties available and everyone would have to buy. Frankly it's each to their own. Everyone has their own scenario, their own reasons. I bought a cheap property at 23 which I rent out but there are many times when I wish I didn't have it because it does tie me down and I want to travel the world. I live close to the city in a share house where we pay $900 combined a week in rent, but to buy the same property would cost $1.5M - I could never in this life afford to buy there!
Both options are viable, both are valid.
i am going to spent my retirement on cruise ship. i know lady that dose that 30 to 40 time a year her husband died on the ship. property has it good and bad bit.
Why bother? Debt slave for a few decades, then its time for the cemetery when you could have just blown it all on coke and casino's. All that effort and money for an overpriced pile of bricks that you have to maintain? Eh? Just wait when property here falls apart, interest rates triple, and all those loans POOF!
this is so true…all those years, thousands (maybe hundreds of thousands) in interest paid to the bank. People forget that that interest plus your principle payments represents how many hours at your job , how many hours you missed with kids/family/friends, how many hours you could have been doing something you love. For what in the end? A pile of bricks which could lose its value but your time is gone. Sure you can say its an investment, i will give it to the kids etc on your deathbed are you going to say " geez I'm so happy I spent a squillion and have this house, much better than spending that money on enjoying time with loved ones". Don't think so. Sorry, I'm on bit of a depressive rant here.This thread has made me think about things.
this is so true…all those years, thousands (maybe hundreds of thousands) in rent paid to the landlord. People forget that that rents represents how many hours at your job , how many hours you missed with kids/family/friends, how many hours you could have been doing something you love. For what in the end?
A pile of bricks which could lose its valueNil but your time is gone.
So? I pay for you rent to keep this shithole maintained and not falling down on me when I sleep. Fair is fair. Way different to slaving away to a bank then being responsible for it yourself. Pfffft. Plus I am not tied down. At all. I can take a duffle bag and van and piss off somewhere else in an hour. Hours at a job represents what I want to do, there are plenty of ways to make money outside of full time "work". You'll be crying for my rent when this property bubble pops, interest rates triple and you are up against the wall with your precious mortgage … . .
The people at ops work are likely to be spending just as much time at work as him. Fair enough if they worked part time etc but the argument of spending more time with loved ones doesn't really ring true for most tenants.
I know all my tenants work full time - and I only work part time. We also earn less (from employment) than most of them and go on more holidays.
Wow op is so judgemental. Nothing wrong with renting. The "owning a home is the Australian dream" traditional conventional view is kind of outdated. While it is nice to own, the younger generation are more flexible and don't follow one set rule only.
What I find is that the younger generations changed their mindset and priorities.
Older generations are more future thinkers, they usually think "if i put my back into laying my road, I can spend the 2nd half of my life in luxury".
Where as the newer generations think like: "If i put so much hard work in, it means I want to at least enjoy myself" hence why they usually spend most of their money on assets and activities which have no returns in the future.
One generation likes delayed incentives, one generation loves immediate incentives.
I don't think these kinds of generalisations are useful at all.
I believe that a lot of Gen Y by the time they reach late 20's will be thinking a lot about how to fund our retirements. I know for myself and many of my peers that have just hit this age, we are starting to think about these things with the assumption that there will be no aged pension for us.
No matter the generation, society always seems to manage to frame youth in terms of crisis and talk with concern about how they are ruining their futures. Boomers might have hit adulthood in a different financial climate but you can be certain their elders spoke with the same concern about them.
I only know a handful of Gen Y who fit the debt laden frivolous stereotype, and generally speaking they've picked up their poor financial skills from behaviours modelled by their parents.
Older generations are more future thinkers,
Is that why most of them are on the pension?… Claiming they didn't have superannuation is crap, since they know they're going to get old anyway
How do people pay rent on an aged pension?
They don't, they go into community housing lol.
I reckon your 40 and 50 y.o friends have stuffed up. They are at an age where they could have bought a house cheaply pre-2001 and their mortgage repayments would be way lower than their current rents.
However, now it's a completely different proposition for the 20 and 30 y.o's of Australia who have to make the buy vs rent decision. Australian property prices are way too high relative to wages. If I was a 20 y.o first home buyer I would rent until the next good old fashioned recession came along.
It's amazing what 10% plus unemployment can do to property prices. Something Aussies haven't had to worry about since 1991 and whole generations (X and Y) would only know about if they read their history books.
My parents decided to pay off their house instead of redrawing and buying up Rio Tinto shares in the 80's when they were a little over $4 each, in the end they decided that it would be better to pay off the house for the security.
As it turns out, most people today would consider either in isolation to be a good financial decision today, but with the benefit of hindsight, the shares would have provided a far better return. My dad talks about it as his lost millions but there is no point getting hung up on what could have been, for all he knew at the time it could have gone the other way as well.
My point is that 2001 there was no way of knowing where the property market was heading compared to other investments. We only consider not buying property in 2001 as a mistake because we have hindsight in our favour. I also regret not shovelling the money I had saved for a house deposit into the share market in 2009 after the crash but again, hindsight. At the time I thought I might buy in the next 12 months so wasn't prepared to take the risk.
the shares would have provided a far better return
Not sure what timeframe you're talking about but RIO shares are $57.50 today. That's 1338% return from capital growth
If you assume your parents bought their house in mid-seventies then Sydney median house price has risen from 1975 ($34,300) to now ($800,000) gives 2232% return from capital growth
Dividends would have been paid by RIO (taxed) and might be slightly higher than the rent they would have paid (not tax deductible), but all in all the house was a better return or at worst line-ball. "Lost millions" hey?
Also they could get 90% leverage on a house, while the shares are at best leveraged to 50%. Plus shares can have margin calls, houses can't.
They neither bought in the 70's or in Sydney. They are looking at more like 700% over 30ish years which doesn't include the money they spent on two extensions to the house, a kitchen/bathroom reno and other maintenance.
It is a moot point though as no one back then, in Sydney or any other city could predict how either market was going to do over the next 30-40 years. It is easy to say today that property in Sydney was clearly a better choice but that is benefit of hindsight.
On the other hand the council could range rules for their area any day and triple the value of their property is worth to a developer overnight, or that may never happen. Who knows what the future holds…
Yep, something else I thought of after I posted, the RIO cap gains would have one mighty tax bill on the day of sale. Wasn't factored into my calcs
I agree with @Cheap Steve, those 40 to 50 y.o ppl could have bought property back in the 90s or early 2000s. I'm speaking for those older people who actually got the money - if they don't have the money then fair enough.
I have a colleague who is in his late 50s in the managerial position, he owns a property that he rents out but then one day he came back from his overseas job with no place to live and he doesn't want to kick out his tenant either.
I think it's stupid that you provide accomodation for others but then you don't have a place to call your home, especially if you can afford it :\
I myself used to rent apartment but then bought a unit in the city. It's downsizing but I don't sacrifice my lifestyle at all because the mortgage payment is the same as renting. At least I have my own place and don't have to be worry about getting kicked out or anything.
Dont encourage renters to buy! There has to be enough demand to put up the rent on my investment properties!!!!!!!!!!!!
There is no real demand in Perth anymore.
As a renter I always ask for less and ever since I realised I could say no, I've never accept a rent increase. We've always decided to relocate before the owner had stuck to their guns on a rent increase.
You must move often
Whether you rent or not has nothing to do with your age and everything to do with whether it's worthwhile to buy or not.
Australia, having the second most overpriced market in the world, does not have any housing worth buying.
End of story.
I think most people forget or don't realise that for most of us, we don't actually own our own home but rather the bank does!
For some its important for others not so. We were at one point able to buy a house easily (mortgaged of course) but we chose not to and decided to rent because it costed less than our mortgage repayments.
No biggy in my view.
Hold on, are you sure your workmate has told you everything? Maybe he rents but is a property owner/investor! I just read a financial columnist article that says it's another way to go about it. Why, because buying your first home and paying it off has no negative gearing value but borrowing for property has. So Money mag says Don't Despair to the young generation if you can't buy your own home, look to invest and become a property owner. The way I see it, the younger generation can only amass that first deposit by being high(er) income earners, living at home for as longgggggg as possible, or their parents help them with the deposit.
Maybe that's the way they believe life should be about. I personally think that visiting as many places as you can while still walking is a pretty good option in life. If you have enough money to afford it - go for it. Especially if you don't have kids but if you do, kids should be #1 priority in any case.
People travel with kids too
The positive side of renting is that you can live in some amazing places you could never afford otherwise.
All through my twenties I lived in lots of awesome units directly across from the beach. It was a healthy and great social lifestyle in a million dollar plus beach-side suburb where I could never have afforded to buy a house.
Ultimately, though my bride-to-be and I had the whole "rent and save (me) versus buy house (bride)" conversation.
My excel spreadsheets showing comprehensively the strong long-term mathematical advantages of renting cheaply and investing the savings in the sharemarket lost out for her argument of a dog and a backyard.
I hope I don't give in so easily when (If) I get a second half.
I have the same spreadsheets :).
I would've thought renting and investing in shares would come out a little bit worse off (in terms of $) than paying a deposit and paying interest. I've only done rough calculations not spreadsheet in detail kind. Care to share your detailed calculations :)?
Dont Buy A House/Unit PERIOD,
Rent mine, pay me to pay my loan… :)
Paying interest yeh sure, Its like paying rent.. But if ur smart about it u can offset banks money, pay less. And your not going to be paying it forever. Rent you will be.
What a nonsensical statement. I used to rent, so by your argument I am still renting right?
Terrible argument, unfortunately most of the Aus population think that way.
If you're smart you can also use the savings from renting to invest in a superior asset class
Savings from renting? Rented out for 280p/w But mortgage is 1080pm
Thats positive for owning… same with place I live, would be paying shitloads more in rent than I do on the mortgage, So the savings i can invest ia "superior asset class" and own,
On the otherhand, If I was in sydney maybe a valid argument..
I cannot believe the narrow minded view some people on here have.
There is nothing wrong with buying a house or renting.
There is freedom with renting like being able to move easily without being locked into one location for the rest of your life. Situations change like having to move for a different job, wanting a new location to live, having to move because of sick family the list goes on. If you rent this is easier than having to sell your house or start a new mortgage. Just because you rent does not meant you do not save either. You potentially have more capacity to budget as you have a fixed payment per week. If you own a house you could have repairs or unforeseen damages (which insurance may or may not cover). Just to finish off I am in the process of purchasing a house but I do see the advantages of both options and it is a personal decision. OP I think you are a bit judgemental and narrow minded to see your workmates as wrong just because they do not live life the way you have decided to. The great Australian dream of owning a house may not be every Australian's dream.
The great Australian dream has become a nightmare in these days of massive property prices…….
The 'Australian dream' seems pretty identical to the 'American dream' to me:
Own a big McMansion
Have 2.5 kids
Own a BMW
Have the latest gadgets
etc…
A lot of confirmation bias at work!
People have a strong tendency to prefer information/data that supports the choices they've made and discount information or arguments that is contrary to their choices. Hence a lot of property owners crowing about their price growth and discounting the freedom and investment flexibility of renting, and lots of renters saying that property is way overpriced.
In defence of property as an investment, there is nothing like a mortgage to force people into a regular schedule of forced savings. While renting gives you excess capital that you can then go and invest, many renters find it hard to resist spending that excess on lifestyle. I.e., plenty of home owners paying their mortgage making their own lunches, not going out as much etc etc. Its hard to find people who make their own lunch and don't buy luxuries as they are saving to put money into their next share purchase/index fund etc. Although I happen to be one.
Both renting or buying have rational justifications depending on one's circumstances.
Either way, most people are either renting from a landlord or alternatively renting capital from a bank in order to buy their place.
Owning a property has the security of the asset going for it (so you can borrow anywhere from 103% for it in certain periods!), the savings from imputed rent the homeowner receives (http://economix.blogs.nytimes.com/2013/09/03/taxing-homeowne…), lifestyle benefits, and hopefully capital gains that are CGT exempt - but in the negative, interest costs, maintenance costs, rates and insurance (which do stack up over the years), and rather expensive transaction costs. It is the ultimate tax effective, set and forget investment that is hedged to the level of wages (albeit, seems a bit out of whack in Australia at the moment). But its relative stability is offset by its inflexibility. I have a colleague who has been looking to buy a new house (and sell the old one) for 2 years now…….
Renting is cheap. Or should be considerably cheaper, depending on each particular market. It gives you flexibility (but also potentially insecurity of tenure), and should ideally give you an excess of capital to go and spend on your lifestyle (which shouldn't be dismissed out of hand, you only live once, after all) or growth investments. The temptation to consume is strong among many, and investment can be confusing, intimidating and full of pitfalls (of the inexperienced investors own making!) so this is one reason why I think renters often lose out compared to home owners.
And don't discount the cost of your commute. Sure people could buy a house in the outer suburbs to buy a place, but if time is important to you and you work in a city, then renting in the inner city may be better value. If you are a wage slave commuting an hour a day to a 5 day a week job, that's 20 days in hours of time (48 weeks x 5 days x 2 hours = 480 hours). Equivalent to most people's annual leave! Whereas if you have a shorter commute you can spend the hours you save exercising, reading, learning, studying, managing your own side business etc etc, or just writing long rants on ozbargain forums!
Do you enjoy paying all the rates, maintenance, insurance and strata fees on your city apartment OP?
Strata is the worst because all those DIRTY lowly renters treat the common property like crap and you have to pay for the mess and damage.