With rental prices in Perth soaring to record highs over the past year and interest rates at an all-time low, many prospective first home buyers may be asking themselves, ‘Should I continue renting, or is now the time to buy my first home?’
In many areas of Perth, rent has become so expensive it is now on par with weekly mortgage repayments. According to REIWA, the median rental price in Perth is $470 for a house and $450 for an apartment or unit - this is equivalent to repayments on a $350,000 mortgage.
Local Mortgage Choice owner Andrew Sawyer advises that buying a home is usually the biggest financial commitment a person will make in their lifetime. When considering whether you should rent or buy, it’s important to weigh up the pros and cons of each option before making any decisions.
Renting - Pros
- Being able to live in a suburb where you can’t afford to buy
- No long-term financial commitment
- No maintenance, council rates or strata fees to worry about
- Usually cheaper than paying off a mortgage
- Flexibility to move somewhere else when your lease expires
Renting - Cons
- Insecure – you may have to move out if your landlord decides to sell the property
- Rental price increases
- Rental inspections
- Relying on the landlord for repairs to the property
- Cannot make any changes to the property without the landlord’s permission
Buying - Pros
- Property is a good long-term investment - you are investing in an asset that is likely to increase in value over time
- As you pay off the loan you are building up equity, which you can use towards future investments
- Offers greater security than renting – you decide if/when you want to move out of the property
- Freedom to make changes to the property such as renovating or redecorating
Buying - Cons
- Long-term financial commitment
- Not being able to afford to live in the suburb you want
- Maintenance costs are your responsibility
- Council rates, strata fees and other associated costs
Overall, renting may be a cheaper short-term option with fewer responsibilities and financial commitments. But renting lacks the long-term benefits and financial security that owning your own home can bring. Buying your first property is more than just having a roof over your head, it can be a great step towards setting yourself up financially for the future.
So if you are thinking about taking your first step onto the property ladder, why not contact your local Perth mortgage broker Andrew Sawyer on (08) 9277 9888 to discuss how he can help you secure your financial future.