rent vs buy

Rent vs Buy: Why Millennials Are Renting More Than They’re Buying Houses

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Faced with rent vs buy home decisions, more Australian millennials today are choosing ‘rent’ over ‘buy’.   

Labelled as the “Generation Rent,” millennials far prefer to enjoy the benefits of renting something without the hassle of going through the processes involved in ownership. 

When it comes to owning a property, it appears that most Australian millennials aren’t just avoiding the strings attached to homeownership. A growing number of Australians are becoming a part of the “generation rent” because they couldn’t own a house and fear they will never ever in their lives.  

According to a recent survey conducted by Finder, more than a third of Australian renters believe they’ll never be able to afford their own house.  

The survey found that 680 renters out of 2000 believe the great Australian dream is impossible. That figure is concerning because assuming these people will forever rent, that number translates to 900,000 Australian households. 

The number of people renting in Australia has increased from 28 per cent in 1997-98 to 32 per cent in 2017-18. Today, there are 6.3 million renters in Australia. 

Still, out of 2000 surveyed, 960 are hopefuls. They believe they will still own a house, just not right away. 29 per cent of renters believe they will get into the housing market within the next five years while 19 per cent thinks it will take them 10 years to own a house. 

Not Interested in Owning a Home 

Evidently though, there are also Australians who are renting not because they can’t afford to buy a home, but because they chose ‘rent’ when they were faced with the rent vs buy decision.  

According to money expert Bessie Hassan, 1 in 10 people have no interest in owning a home any time soon. “It’s now becoming a lot more acceptable to be a long-term renter.” 

Rent vs Buy? Buy and Own Your Dream Home! 

The good news for renters who still hope of buying their own house someday is that you have a bigger chance to fulfil that dream now more than ever. With the recent changes in the property market across the country, you don’t have to give up your dreams just yet.  

Sydney and Melbourne houses are expensive and prices are still increasing. But perhaps you just need to look elsewhere and be flexible with your expectations.  

Like Ms. Hassan said, “You might not get that freestanding house on a big block, you might need to settle for an apartment. It depends on what your priority is and how important it is to you to get on the ladder. It’s about fitting that dream into the reality of the market.” 

“Be realistic about your predicament and take advantage of market conditions. 

“It’s actually better market conditions for first-time buyers than it has been in a few years. 

“There’s a fair bit of choice out there so if you’re willing to be flexible then you do have some bargaining power.” 

Rent vs Buy? Buy and Consider Your Options 

Nerida Conisbee, chief economist with REA Group agreed that affordability is still an issue when it comes to owning a house but that the situation has improved a lot.  

“There’s no doubt that more people are renting. We know from ABS data that’s the case. But in terms of affordability, the situation has improved a lot.”  

“We are finding that first-home buyer activity, in particular, is increasing, so it really depends on where you are in the cycle and where in Australia you are as to whether you can move from renting to buying.” 

In other words, consider living in other areas where the price of the house and monthly mortgage will fit right in your budget. In the end, those who chose to buy instead of rent will come out better. 

“Ultimately, owning a home by the time you get to retirement does put you in a vastly different situation than if you don’t,” Ms Conisbee said. 

“So, the younger you get into the property market the better — even if your home doesn’t increase in value to an enormous extent, or it isn’t the dream home you’d expected. Just the fact that you’re paying off a property and getting equity in an asset puts you in a great position.” 

Buying your first house and need property tax advice? Contact a Chan & Naylor accounting specialist here

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