A recent ING DIRECT survey found almost 90% of property owners believe owning rather than renting makes better financial sense – and close to 70% of renters agree.
It’s a question on the lips of many first-time buyers: is it better to rent or buy?
While in recent years we have seen the rise of so-called ‘generation rent’ – a reflection of the challenges facing young Australians who want to get on the housing ladder – an ING DIRECT survey (2015) highlights how the vast majority of Australians still believe there are benefits to property ownership.
Potential benefits of buying
- For starters, home ownership provides psychological security. There is no landlord to tell you to move out; you can decorate, renovate and even redesign your home to suit personal taste. And for families in particular, a home forms the central hub of a personal community.
- Overarching these emotionally-driven benefits, home ownership could leave us financially better off than renting over time. As a guide, ING DIRECT research (2015) found that 86% of property owners believe owning rather than renting is a better financial choice, and 67% of renters agreed.
- Perhaps the most significant financial plus of property ownership is the potential to earn decent long term returns. According to figures from research group CoreLogic (Q3 2015), dwelling values across Australia’s combined state capitals have risen by an average of 5.7% annually over past 10 years. For property owners in our most expensive cities like Sydney and Melbourne, these gains can translate into hundreds of thousands of dollars, meaning property ownership could deliver a substantial boost to personal wealth.
Owning property brings additional responsibility
On the flipside, property ownership comes with a range of ongoing costs.
- While renters are expected to maintain a leased property in reasonable condition, they are free from the fiscal responsibility of paying for repairs, rates, strata levies, insurance and all the other costs that go hand in hand with property ownership.
- Property owners on the other hand also wear the cost of regular home loan repayments. However, it’s worth pointing out that these payments are a form of forced saving – after all, renters are required to make regular rent payments too and ultimately, both parties are paying off an appreciating asset. The difference is that property owners are paying off their own asset.
The long term gains point to owning
Yes, there are arguments for renting. It carries less responsibility; it doesn’t involve the commitment of a home loan, and renting offers the freedom and flexibility to move around according to personal preference, career demands or family choice.
But when it comes to financial pluses, many Australians think owning a property – either as an owner occupier or a landlord – comes up trumps over time.
Data from CoreLogic RP Data Hedonic Home Value Index, September 2015 Results Released: Thursday, October 1, 2015
The information is current as at publication. Any advice on this website does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. Deposit products, savings products, credit card and home loan products are issued by ING, a business name of ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823. ING Living Super (which is part of the ING Superannuation Fund ABN 13 355 603 448) is issued by Diversa Trustees Limited ABN 49 006 421 638, AFSL 235153 RSE L0000635. The insurance cover offered by ING Living Super is provided by Metlife Insurance Limited ABN 75 004 274 882, AFSL 238096. ING Home and Contents Insurance is issued by Auto & General Insurance Company Limited (AGIC) ABN 42 111 586 353 AFSL Licence No 285571 as insurer. It is distributed by Auto & General Services Pty Ltd (AGS) ABN 61 003 617 909 AFSL 241411 and by ING as an Authorised Representative AR 1247634 of AGS. All applications for credit are subject to ING's credit approval criteria, and fees and charges apply. You should consider the relevant Product Disclosure Statement, Terms and Conditions, Fees and Limits Schedule, Financial Services Guide, Key Facts Sheet and Credit Guide available at ing.com.au when deciding whether to acquire, or to continue to hold, a product. Before interacting with us via our social media platforms, please take a minute to familiarise yourself with our Social Media User Terms https://www.ing.com.au/pdf/Social_Media_User_Terms.pdf.