Jan 18, 2024 12:09:19 PM

Is Buying Cheaper Than Renting? Unravelling the Aus Property Conundrum

Topics: First Home Buyer, Financial Advice, Buying and selling 0

Choosing between renting and buying usually comes down to finances. If you’re unable to save a deposit or afford the cost of a mortgage, it makes sense to continue renting. While there may be fewer up-front costs to renting, in the long-term, paying off a mortgage generally puts you in a better financial position. Here are three reasons why buying a home can be a financially savvy move, as well as valuable tips for first home buyers taking the leap from renting to owning.


1. Equity building and long-term investment

One of the primary advantages of home ownership is the ability to build equity over time. While renting may offer an affordable, temporary solution, it doesn't generate any long-term wealth. Essentially, you’re paying off someone else’s mortgage!

By investing in your own property instead, you’re not only getting a place to call home but also setting yourself up for future financial gain as your property appreciates in value. As equity continues to build over time, it provides an opportunity for further property investment or access to necessary funds when needed.

2. Stable mortgage repayments vs. unpredictable rent increases

Rental prices in Australia are expected to climb over the coming year by as much as 10 per cent in some regions, adding more pressure to households already struggling with tight budgets and the high cost of living.

Having a fixed rate mortgage provides homeowners with some stability in knowing how much their mortgage repayments will be, allowing for better budgeting and financial planning, and protection from unpredictable rent increases.

3. Government incentives for first home buyers

Not only do first home buyers face the challenge of saving a big enough deposit, but to qualify for a mortgage, they must also have enough income to meet their mortgage repayments. As house prices have significantly outpaced income levels over the past decade, it’s become increasingly harder for first home buyers to do either.

Accessing incentives and grants provided by the Australian Government can help ease the financial burden of buying a first home and make home ownership a more accessible and financially viable option. From the First Home Owner Grant – a national scheme funded and administered by the states and territories – to stamp duty concessions and First Home Guarantee, these initiatives are designed to support first home buyers.

Tips for first home buyers taking the leap to home ownership:

  • Have your finances assessed by a mortgage broker to determine your borrowing capacity, and pay down existing debt as much as possible.
  • Find out if you’re eligible to receive any Government grants or incentives for first home buyers as these can make a big difference to how much you can afford.
  • Get professional mortgage advice from an experienced mortgage broker who can explain the intricacies of the home buying process and help you apply for the most appropriate financing solution.
  • Plan for the future and consider how home ownership aligns with your long-term finance goals. Look for properties and locations that are likely to increase in value so you buy a smart investment.

Buying vs. renting: which is right for you?

Choosing whether to buy a home or rent a property is a personal decision that requires careful consideration of finances, goals and needs. Both renting and buying have their own pros and cons, and what might be right for someone else may not be the right for another. It’s important to carefully weigh up the benefits and research each option before deciding.

If you're a first home buyer navigating the property market or you’d like advice about getting mortgage finance to buy a home in Australia, contact a Mortgage Express broker to help guide you through every step of the process.

While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.