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Renting VS Buying a House | The Pros and Cons

August 13, 2019 Leave a comment
Brought to you by National Australia Bank 

Renting vs buying a house, the debate is never ending. We look at the pros and cons of both options to help make the right decision for you.


Housing affordability is a huge issue. Working out whether to jump onto the property ladder or continue renting can be a confusing decision. We’ll go through some of the pros and cons of both options to help you make an informed decision.

Renting: The Pros

Frees up your savings

By choosing the renting life over home ownership, you’re not spending your savings on a deposit and all the costs associated with buying a home. You’re freeing up money to spend or invest elsewhere. Depending on where you invest the money, you may actually get a greater return on investment than if you’d bought a house. You need to think carefully about your investment goals and strategy.

Or you may be at a time in your life when you’re not yet ready to have all your savings and monthly income going towards a deposit and a mortgage. Does travel or study beckon?

It gives you more flexibility

Renting gives you flexibility. As a tenant you can freely relocate from home to home and area to area once your lease expires. The significant costs associated with buying and selling means that you have less flexibility when choosing to move house.

Allows you to diversify your investments

Buying a home, especially for first home buyers, often means that all your savings will be going towards the one asset. Do you feel comfortable with most, if not all, of your savings being tied up in a single investment? Renting allows you to use your savings across a broad range of investments. By diversifying your investments, you’re also spreading out any potential risk.

Renting: The Cons

If history is a past indicator, the cost of renting will steadily increase over the years due to inflation and rise in property prices. Depending on where you live, your mortgage repayments may initially be higher than the cost of renting, but over the life of the loan, the interest charged reduces as the principal is paid off. Many people pay off their mortgage in under 30 years. Sure they’ll still have costs for home maintenance and council rates, but they’ll be free of large monthly payments to live in their home. But if you choose a life of tenancy, you’ll always have rental payments. Once you hit retirement and your income is reduced, it may be difficult to find a large sum of money each month. You may also be less able to absorb rent increases.

No forced savings

A mortgage is like forced savings. You’re obligated to pay your mortgage every month – putting money towards an asset that could potentially increase over time. But with renting, it can be tempting to spend spare cash rather than saving or investing it.

Buying A House: The Pros

It gives you stability and freedom

Buying a home provides you with certainty; there’s no risk that you’ll be displaced by a landlord. Tenants have very little say in how long they can occupy a rental property beyond the lease term. Living in your own home also allows you the freedom to renovate and decorate your home as you please.

Rise in house prices over time

Having an asset that may increase in value over time is appealing. While house prices have consistently risen over the long-term, they can also have periods of weak growth or even fall in value. You need to remember that home ownership is a long term investment strategy.

The ability to use the equity in your home

Home equity is the proportion of your home that you own. Provided that the value of your house is increasing, as you pay off your loan, your equity will also be increasing. You may then be able to use the equity to fund an investment such as shares or a managed fund.

Buying A House: The Cons

You’ll be paying interest

The interest and fees you pay over the life of a loan can be significant. Be prepared for interest rates to fluctuate during the term of your loan, especially if you have a variable interest rate or when your fixed rate period expires.

There are opportunity costs

This is the cost of having your money tied up in property. If you choose a life of renting, you’ll have the money you would have saved for a deposit to spend elsewhere. This might be for travel, study, entertainment or your own business. It could also be used for other investments that potentially could yield greater or quicker returns than a residential property will.

Ownership costs are more than just a deposit and loan repayments

Buying and selling isn’t cheap. According to the Reserve Bank of Australia, it costs about 4% of the sale price of your home to sell (agents fees, advertising) and about 6% of the purchase cost to buy (stamp duty, government fees, conveyancing costs, loan establishment fees). Not to mention the ongoing running costs of owning a property including council rates, repairs, depreciation, body corporate fees, water and insurance costs. It’s much more than just saving for your deposit.

Doing The Sums: The Best Option For You

As we’ve seen, the case for buying or renting isn’t a simple one. There are many different factors to consider including your financial resources, lifestyle, family needs, investment goals and appetite for risk. Doing research and talking to an expert is a good idea. To assist you with your decision, as a starting point, we’ve got a handy rent vs buy calculator. Based on your current rental repayments this tool will help you work out if you could afford a home loan.

Important Information
The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.
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Categories: Real Estate Services

2019 Rate My Agent Awards

February 21, 2019 Leave a comment

Wow, what a great night!

It was such an honour to be nominated for RMA Agent of the Year for both Victoria and Australia for the third consecutive year! Thrilled to be recognised as the Number 1 Agent in Victoria and so grateful to all of my valued clients that took the time to share their experience.

Also a big shout out to my incredible team, who work so hard everyday to provide our clients with top notch service.

Market Update

The Domain Group reports that Melbourne property listings are running at about five per cent below the stock levels of 2017 so far this year. Buyers have had less choice throughout the cooler Winter months, particularly during the school holiday period.

Despite a tightening of supply, buyers have been wary of paying too much for property and in many cases are constrained on what they can spend due to the widening clampdown on mortgage lending. This has been illustrated by lower auction clearance rates compared to last year and relatively lower levels of enquiry. So if you are considering buying, now is your opportunity. We have seen real estate circles like this before (2008/2011), where buyers have tried to pick the bottom of the market and outsmart themselves. Particularly if you are upsizing on your property, now is the best climate to take action.

Low interest rates, strong employment growth and strong population growth continue to be a positive foundation for the housing market. AMP chief economist Shane Oliver believes that some parts of the Melbourne market may hold up better than others going into 2019. Melbourne’s outer perimeter, for example, continues to grow. The REIV reports that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

REIV President, Richard Simpson notes that, “auctions continue to be popular all over Melbourne, but clearance rates have fallen from the lofty highs of early 2017. Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations”.

This is an important reminder, particularly as we should see an increase in stock levels in late Winter and as we move into the peak Spring selling season. If you would like a complimentary appraisal of your home or simply wish to chat about the market, give me a call on 0403 020 404.

Buying At Auction

With 2018 auction clearance rates in Melbourne in the low-mid 60 percent range, you may be wondering if it’s time to reconsider your strategy or, perhaps adopt one! Here I take a look at all the different paths you could take, and their pros and cons.

Should I bid?

If you’re interested in buying the property, yes! There are several benefits to bidding, with the obvious one being that subject to reasoning the vendor’s reserve price, the highest bidder becomes the purchaser.

It’s important to remember that if you are the successful bidder, there are no delays. Contracts of Sale are signed and exchanged then and there so you must have your finance in order, and the sale isn’t subject to any conditions (an unconditional sale). With that in mind, it’s important to inspect the legal documentation and arrange any necessary inspections prior to auction day.

When bidding, stick to your budget but also keep in mind how much you would be willing and able to stretch if needed. If an extra ten, five or one even thousand dollars could knock out your competition and secure you the property, feel empowered to make those extra bids boldly. Sometimes, that’s the difference between winning and missing out on auction day.

One of the biggest advantages about buying at auction is the transparency. It’s an open forum where you can see who you’re bidding against and at the same time, have an opportunity to respond.

If a property doesn’t reach the vendor’s reserve price, the property will be passed in. The highest bidder has the first and exclusive right to negotiate for the property which is a fantastic position to be in. However, if you choose to hold back and not bid, you miss out on a terrific purchasing opportunity.

Potential purchasers often show reluctance to bid as they’re worried about paying too much under competitive circumstances. This is completely understandable however if you stick to your budget and know your stretch limits as noted above, you should feel confident about putting yourself in the best position to secure the property at a price you’re comfortable with.

If the property passes in, should I go inside and negotiate, or stay outside?

If the property passes in with no genuine bids, but you’re still interested, the agent may invite you inside the property to negotiate.

This may ultimately come down to your personal preference – you may be more comfortable to negotiate inside, where it’s more private. Alternatively, by staying outside, you can see and evaluate any remaining competition. On the flip side, the competition also has that same advantage if you stay outside and can see who is having conversations and try to analyse the body language and potential outcome.

Remember, if no one has bid, the vendor, via their real estate agent, is able to negotiate a sale with any genuine buyer.

Should I wait until after the weekend is over to show my interest, if the property has passed in?

Most agents will schedule an open for inspection on the Monday afternoon/evening if a property passes in on the weekend. This opens the property not only for potential buyers who had interest prior to the auction, but also to a fresh pool of potential buyers. The downside of this strategy is that you don’t have the transparency of auction conditions, and you no longer have a grasp on who you may be in competition with to secure the property.

Should I put in an offer to purchase the property prior to auction?

In many auction campaigns, the vendor provides instruction to their agent that they won’t consider any offers made prior to their auction. They would prefer to let the property go to auction and let the competition on the day determine what it sells for. Circumstances vary and can change, however, so it’s best to have a discussion with the agent and seek their advice. It’s so important to make your interest in a property known to the agent, so that they can keep you informed of any developments.

Purchasing your new home or investment property is an exciting experience but can also be a bit daunting. Ensure you do your due diligence and familiarise yourself with the sales documents, the area and recent local sales. Being properly informed will add to your confidence and increase your chance of success.

I’m available to help if you have any questions relating to a property we’re selling, or to assist you with any real estate advice you need.

2018 Top 100 Agent Rankings

To be ranked as an REB Top 100 Agent is the standard real estate professionals strive for! It is the foremost ranking of agents in Australia and the benchmark for success in residential real estate sales.

I’m thrilled to be ranked #9 on this list for 2018, and be among such great company across a number of agencies throughout Australia.

As always, I am so grateful to my family, clients and friends – and my personal team who work to make it all happen, day in and day out.

2018 Rate My Agent Awards

February 26, 2018 Leave a comment

Wow, what a night. It was an incredible honour and extremely humbling to be named the Victorian & Australian Agent of the Year at the Rate My Agent Awards, for the second year in a row.

I was joined by my amazing team who are an incredible support to me, day in and day out; these awards acknowledge their hard work too.

To my clients, your support has meant the world to me and representing you through the journey of selling your home is why we love this job so much.

Thanks to my family, friends and colleagues. I hope 2018 is a wonderful year for us all.

2017-2018 Market Wrap

December 20, 2017 Leave a comment

How did the 2017 real estate market fare, and what can we expect in 2018?

Join me for a review of the year that was, and learn my top tips if you’re considering selling in 2018.