It makes one despair when an article such as the one below appears. Renting has always been cheaper than owning for as long as I have been in the business, and well before then too.
How come an expert such as Dominck Stephens of Westpac has only just woken up to the fact?
Higher interest rates may well make renting even more attractive than before, but that is on the single view point of money in versus money out .
“Renting or buying is roughly in balance (now),” he says.
Owing your own home is still the dream of most people, but so is Lotto and the Casino.
I reproduce the article only to demonstrate that the bleeding obvious is still lost on many who are supposed to be knowledgable in these matters
Mortgage rate rises favour renting vs buying
As interest rates continue to rise, house prices may fall in the next couple of years, according to a report by Westpac Bank.
And as interest rates rise, the picture will tip in favour of renting, rather than buying, Westpac says.
“Renting or buying is roughly in balance (now),” Westpac chief economist Dominick Stephens said.
Last year when interest rates were low, it was seen as much better to buy a home than rent.
“When mortgage rates have gone up another 1 per cent or so, the decision may well favour renting,” Stephens said.
Asked if it was better to hold off buying now when house prices might fall, he said “I’d be cautious”. Because interest rates were likely to rise and it would be a good idea to fix borrowing costs, but there were still opportunities to invest in property.
Floating mortgage rates are heading towards 8 per cent and fixed term rates to about 7 per cent and may stay up for an extended period as the Reserve Bank tries to tame inflation, especially in the construction sector.