Should I Rent Or Buy A Home?

Buying a home has been the Australian dream for generations, but is it still the right way to go from a financial perspective? Is it better to rent or buy a home?

Should I Rent Or Buy A Home?

For many years Australians had felt that the key to financial security was through home ownership. Renting was seen as something only for those who couldn’t afford to buy, and we were constantly given messages through the media such as ‘rent money is dead money’.

Although many people still harbour dreams of home ownership, an increasing number of Australians are seeing renting as a more attractive option.

There are a number of factors to consider when deciding between renting and buying, and the outcome of each will depend on your own unique goals and attitude.

Financial Benefits Of Buying Vs. Renting

Many people see home ownership as a path to wealth creation. This feeling has become further entrenched due to the property boom that Australia experienced during the decade from 2000 to 2010.

Although many people like to think that property prices only ever go up, this is not the truth. Certainly people who purchased homes towards the start of the boom would have been handsomely rewarded, however there are a growing number of Australians who purchased in recent years who have found themselves with mortgages worth more than their homes.

Many people who choose to rent see the financial benefits in saving money on housing expenses which can then be invested elsewhere. Generally the rental cost of a home will be considerably lower than the mortgage repayment. The theory works that renters will then invest that saved money into shares or other investments.

The problem with this theory is that many people lack the discipline to save the extra money. The person who buys the home is in some ways going through ‘forced savings’ as they have no choice but to make mortgage repayments. A renter on the other hand is not forced to save or invest any money, and may therefore be tempted to spend the difference elsewhere.


Along with the financial benefits of purchasing, many people enjoy the stability of home ownership. When renting there is always a risk that your lease will not be renewed and you will be forced to move, however when you purchase a home you are fairly safe provided that you maintain the mortgage repayments.

There is a flip side to this point however. As today’s society becomes more mobile, a growing number of people do not want to be locked into a single home or a single area. As different work and lifestyle opportunities arise, renting allows people to move interstate or even overseas without the hassle of selling their home.

Which Is Right For You?

Despite what some people may think, there is no single answer as to which is the better option out of renting or buying your home.

For a young single or couple who are still finding their place in the world, renting could be an attractive option, especially if it allows them to live in a more desirable area that they could not afford to buy in.

On the other hand, for a family with children who are well settled and integrated into the local area, buying a property may suit their lifestyle and financial goals better than renting. Whichever option you choose it is important to ensure that it will be financially viable. It’s all good and well to decide on purchasing a home, but first you need to ensure that you will be able to afford the home loan repayments and the associated costs that come with home ownership.

Ultimately the decision to rent or buy comes down to your own needs and financial situation, as well as your goals and aspirations.

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