Renting or buying a house – which should you do?
I rent. It’s a common tale, and invariably a sad one. Renters usually feel like they’re engaged in a war (ask me sometime about the current one I’m waging against the people downstairs) or living somewhere totally bohemian (read, dilapidated).
The rental market is a minefield and one not likely to improve anytime soon.
So what can you do about it?
Is it time to leave the trials and tribulations of a rental property behind, and start looking to buy? After all, the rental prices (especially those in Sydney) are set to rise and at that point you’re probably paying mortgage repayment prices anyway. According to various media, the rental market is already squeezing people out, such as seniors, police and teachers. In shirt, the rental market is no longer affordable to someone on a low-to medium income. To buy or not to buy, that is the question. Here are a couple of tips from the experts on how to choose the right time, and not end up stuck with an unpayable mortgage or a house fondly tagged as a wrecker’s delight.
Renting or buying
The first issue in working out what to do in the rental and housing markets is finding accurate information. At the same time as you read in Sydney that the housing market has gone bust, you hear in Melbourne that it’s having a “red-hot run”. So where can you turn?
Firstly, it’s a good idea to keep an eye on the papers as they will always run with news about the housing market, and whether places are moving quickly. Secondly, the Reserve Bank has a list of statistics around housing, http://www.rba.gov.au/Statistics/AlphaListing/alpha_listing_h.html updated fairly frequently.
Those in the know also suggest watching finance closely, as interest rates might be the thing that breaks you. The recent rise was slated as a means to stop the housing market from overheating, and rates this low could be the ticket you need to buy. Just ensure you understand the vagaries or fixed or varying interest rates, and be fully informed about what level the interests rates will be when they start making it impossible for you to pay back your mortgage.
In times such as these
It’s also important to think about employment prospects when considering buying a home. The surprise drop in unemployment levels this week was a good sign, but it’s still a pretty tight market should you be looking for work. Make sure you are in a situation where you can buffer yourself should things go pear-shaped.
The general consensus is that the housing market is on its way upward, since about mid-July. If you’re looking to buy a home, the feel I get from the commentators is that now is as good a time as any. If you’re looking to sell, maybe holding your hand isn’t a bad idea. But I suspect the experts can predict what might happen with about as much accuracy as I throw darts, meaning none. If the GFC showed us anything, it’s that the experts and commentators can sometimes be badly wrong.
The only piece of advice given with authority from all experts is research, research, research. Research where you want to buy, research what assistance you can get and what mortgage brokers are respected. Make sure you have a definite budget with lots of buffering incorporated into it. Sometimes, it’s just the luck of the draw but an informed guess is always a better option.
Are you thinking about buying? What would influence your decision?
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