Many Aussies want to own their own home. But with median house prices over $1m in Sydney – and with other states close behind – many are questioning the great Australian dream.

Is it better to rent or buy?

There isn’t one right answer for everybody. Your decision will be affected by factors like your career, what type of home you want, where you want to live, and of course the amount you have to spend.

Upfront costs

Buying a home with a home loan typically requires saving a deposit of 20% of the purchase price. There are other costs associated with buying a home, like inspections and legal fees. Renting, on the other hand, usually only requires you to pay a month’s rent and the bond (generally the same amount) up-front.

Explore Suncorp Bank’s offers for first home buyers

If you’ve weighed up the risks and have saved up a deposit, maybe it’s time to buy. But if you’re on a tight budget, it may be wise to hold off.

Ongoing costs

When you own a home, your largest ongoing cost is probably your monthly loan repayments. The exact figure depends on your home loan amount, mortgage term, and interest rate. To get an estimate of your potential repayments, check out Suncorp Bank’s Home Loan Repayment Calculator.

If your rental payments are equal to, or more than, your estimated home loan repayments, you might consider exploring the property market more seriously. But be aware of the other ongoing costs associated with buying a home.

Maintenance and repair costs are a big consideration when buying a home, so factor them in as best you can. You should also check with your local government for estimated land and water rates, as these will also be your responsibility.

Flexibility vs stability

Renting provides a level of flexibility that owning a home doesn’t. If you need to move for work, decide you want a change, or want to upgrade or downgrade according to your budget, you can up and go pretty easily. Owning a home can make the process more difficult, time consuming and costly.

On the flipside, owning a home gives you stability. You’re not at risk of having to move out because the owner is selling or moving back in, and you can budget for your repayments to be about the same each month (depending on whether you have a fixed or variable rate loan).

Freedom to make your home your own

When you buy a home, you’re free to make whatever changes and upgrades you like – if they’re legal, of course. Whereas doing anything to a rental property requires permission, which can be a real frustration for some.

Rentvesting

There is a third option, and that is to buy AND rent. Dubbed Rentvesting, you’ll rent a property to live in that’s right for your lifestyle, while owning an investment property that’s right for your budget. What this looks like is up to you – it could be an apartment in another state.

The bottom line is that sometimes it's smarter to rent, sometimes buying can work in your favour, and you might even consider doing both. The most important thing is to assess your situation and do what’s right for you and your family.

Published 12 May 2022