Published on February 15th, 2017
Is 2017 the year of the renter?
Should you rent a home this year? Should you buy a home this year? These are the questions that every first home buyer or renter will be asking themselves – and it appears the tide is turning. The latest HILDA report shows that this will be the first time that fewer than half of all Australians will own a home as more and more people turn to renting instead.
Could this be the year that renters become the majority? Or is this just a blip on the radar for the residential property part of the Australian Dream?
Why are so many people renting?
Buying your first home is a rite of passage for Australians, so you might wonder why so many are continuing to rent as opposed to making a purchase.
People are renting for a number of reasons. Firstly, prices are very high in some capital cities, so buying a home for sale may simply not be financially feasible for many people who are currently renting. However, there are also lifestyle factors that many people consider important enough to continue renting for. McCrindle research surveyed Australians on what they call "choice renters" – that is, people who prefer to rent even if they have the opportunity to buy.
The results are interesting. According to the survey, about three in 10 Australians are renters. Of these, three in 10 of those are choice renters – they love the fact that they can change locations easily, upsize or downsize as needed, and have the flexibility to travel for extended periods of time without having to worry about the homestead. It appears that these factors are significant enough that some potential buyers are staying their hand at the auction block and negotiating table.
Should people be renting rather than buying?
If choice renters suddenly decide they do want to own a home later in life, they may have missed the opportunity.
Some choice renters may be intending to rent forever – but there are a few worrying figures that should give them pause before committing to that path.
One such statistic comes from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, conducted by the University of Melbourne. This survey, among many other factors, investigated the ability of everyday Australians to purchase homes and keep up with their mortgage. It found that if you don't own a home by the time you are 40, it is highly unlikely that you ever will.
In other words, if choice renters suddenly decide they do want to own a home later in life, they may have missed the opportunity. That cuts them off from an important bit of financial stability as they head into retirement – particularly if they haven't invested elsewhere. Combine that with recent research from the University of Melbourne that over the long term, buying is more financially beneficial than renting – at least in the majority of the capital cities – and it quickly becomes obvious that these 'choice renters' are missing out on long-term gains.
Is it time to take control of your property future? Or will you continue to choose to rent in 2017? For more information on your options, get in touch with Elders Real Estate today.