Rent or buy: The age-old question

Thanks to the low interest rates and the property boom in Australia, buying a house has become the norm. A sprawling house with an outdoor entertainment area in a suburb of your choice would cost you upward of $2m. However, executives are increasingly choosing to rent comfortable apartments and houses in convenient locations, and are ready to pay anything between $1,500-$3,000 a week in rent.

So, what is the best option: Rent or buy?

Why buy?

Buying a house gives you the flexibility to renovate it as per your taste. It highly unlikely that you’ll like everything in the property you choose for yourself. However, once you own a place, moulding it to suit your desires is possible. Whether you want to add an outdoor pool, a cosy fireplace or a plush open kitchen, you can do up the house as per your taste.

However, until, and unless, you are looking to make an investment, searching and buying a property and then disposing of it if you leave the country, can be cumbersome. Of course, there are mortgage brokers and property agents who can help you through the process, but currently, the norm as far as industry movers are concerned, is to rent.

Buying is good when you know what you want. However, when you are constantly on the move, it’s worth weighing up your options carefully.

Why rent?

Consider this: You buy a property worth $2.5m with a 20% deposit, securing a loan for 20 years at a variable rate of 4.5%. Thus, you will be making weekly repayments of $2,917 and will also be spending a significant sum on renovations, stamp duty and other accessory costs.

Moreover, when you move out after two years, you will either have to dispose of the house, or rent it out to someone. If you rent it out, you will also have to spend money on maintaining the house.

On the other hand, you could rent the same house for about $2,500 a month and stay there as long as you like without getting into any complicated transactions.

More frequently, executives are choosing to rent luxury apartments in top suburbs in Australia. It’s important to remember that while renting gives you the freedom to move around hassle free, it also limits your freedom in terms of renovating the house.

Rent or buy?

Ultimately, the decision depends on your lifestyle and financial goals for the future.  However, I suggest that, unless you have found the perfect property you don’t ever want to let go of, think before buying something that can leave you rooted to the spot. The convenience of renting can be a big plus for busy executives on the move.