The age old question: to rent or buy?

It seems like a perennial debate, but for many Australians surrounded by financial and economic uncertainty, the decision about whether to rent or buy a home has arguably never been more relevant.

Renting is a popular option for many, with the National Housing Supply Council (NHSC) reporting that almost 30 percent of Australia’s 8.1 million households are currently rented. Indeed, for those wanting access to popular beach or café communities without the price tag, or for students wanting an apartment near their university of TAFE, renting is the way to go. Also, for city workers who don’t want long commutes from the suburbs, a rental property closer to the office can be ideal.

However, some tenants also rent because they believe the goal of home ownership is unachievable. Rental property website rent.com.au reports that over 55 percent of respondents in their 2011 National Renters Survey stated they are renting because they can’t afford a house, while over 80 percent thought the state of housing affordability was bad.

Despite this outlook, the prospect of rising rents and tightening rental vacancy rates has left many tenants weighing up whether to continue pounding the rental treadmill, or jump into home ownership and mortgage repayments .

There are significant advantages to home ownership, even though choosing the right interest rate and mortgage product can be daunting for some. Many states have some form of assistance to provide aspiring first homebuyers with a leg-up into a first home, and despite the NSW State Government’s recent announcement it is ending first home buyer stamp duty concessions for existing homes, benefits such as the First Home Owners Grant are still available.

Ultimately, if you are able to save a deposit for a quality, well-located home, and commit to regular mortgage repayments, it could be a blessing in disguise for your financial future. In essence, a mortgage allows you to save, because each mortgage repayment brings you a step closer to owning a long-term asset in the shape of your home.

This is quite different to paying long-term rent on a property, where your money ends up in someone else’s bank account, and which can leave you with little in the way of tangible assets at the end of 25 or 30 years. Furthermore, ipac research shows that residential property values can generally be expected to increase at an average annual rate of between 2 percent and 4 percent above inflation, which is all the more reason to consider a home purchase.

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