Matthew Wai

Will renting always be ‘dead money?’ Or will owning a property always guarantee you a constant appreciation? With a fluctuating market and climate, we can never be certain about these variables. However, in this article, we will help you make your decision-making easier by emphasizing the advantages of the two different methods.

Owning a property:

1.     Property value rises in the future

Although property prices may not climb significantly in the short-term, the value of your property will most likely rise in the long-term. This is, however, highly dependable on the features of your property, such as its location or property type (apartment or house). These are all vital factors in determining the value of your property over time. Owning a property should be a long-term investment — so it is best for consumers not to panic when a volatile property market occurs.

2.     Secured property

Owning a property also gives you the freedom and permanent security of the property. In other words, you cannot be evicted by a landlord under any circumstances as you are the landlord! This allows you to sleep soundly at night when you own a property that you intend to live in for a long period of time. As the owner of the property, you can also lease out a portion of the asset to ease the repayment on your home loan (this of course depends on the specified restrictions on your property).

3.     Gain access to the property’s equity

Your property equity figure is calculated as: current property value – remaining loan balance. Gaining access to a property’s equity allows you to obtain part of the amount of your owned property as a loan. This loan can be utilised in many other ways of your choosing, such as: investing, renovating, or even purchasing a second home!

Renting a property:

1.     Cash flow

The deposit for renting a property is significantly lower than purchasing a property. This could be a huge advantage as you can utilise the extra amount of cash to invest in other markets to receive a better return. According to one of the biggest financial firms in Sydney, EY, by relying on the index fund, renters could potentially have a slight lead in returns when compared with owning a property. Read more in https://www.ey.com/en_nz/housing-affordability

2.     Flexibility

The freedom to move from place to place is admired by the more adventurous individuals. Since many individuals don’t plan on living in one place for the rest of their lives, renting is a great option that allows you to move locations quickly.

Buying or renting a property is not always affordable, especially for first home buyers. This is where recent initiatives such as the ‘first home buyer grants’ enacted by the Australian government come into play. Initiatives such as these are specifically designed to make it easier for first home buyers to enter the property market. Renting or buying a property is a big financial decision to make, so make sure to always seek professional assistance when making these decisions.

Information courtesy of:https://www.nab.com.au/personal/life-moments/home-property/buy-first-home/rent-buy