Renting vs buying

Home value may rise over time

Possibly the biggest advantage of owning your own home is that you have an asset that can increase in value over time. The Domain House Price Report showed Perth house prices rose over the September 2023 quarter by 3%, a record high. While housing prices are subject to fluctuation, this can still be a big motivation to buy a property. Keystart customers can track the value of your home in our app, as you track your home loan progress.

Making your place your own

When owning your own home, the freedom to renovate your place is a welcome change from the restrictions you can face when renting, especially if you have a particularly tough landlord. If you have your own place and want to knock a wall or re-tile your bathroom - you can do so as you please.

"Owning my own home is important because that's where my children will grow up, it's where we will make memories together as a family and because it's nice to have somewhere that will always be home."
Keystart customer

Foundation for the future

Home ownership is an emotional milestone and can bring a great sense of pride and achievement. In a recent survey, our customers told us they wanted the security and stability of having their own home and a legacy to pass on to their children.

"By owning my own home I am securing my future and the future of my child."
Keystart customer

Upfront costs

There can be significant upfront costs when buying a home, including:

• your home loan deposit,
• fees and charges,
• moving costs, and
• stamp (transfer) duty.

You may be eligible to access the First Home Owner Grant and transfer duty concessions.

Being aware of these costs and planning for them will set realistic expectations and improve your experience of buying a home.

Paying interest

A home loan is a loan. Lenders charge you interest on the amount you borrow. You'll need to cover a minimum monthly repayment amount made up of principal and interest. Repayment amounts are the major consideration when you're thinking about buying.

At Keystart, our interest rates are variable. This means interest rates will change over time and can go up or down, so you need to be comfortable with your repayments.

Try our calculators to see how different interest rates affect repayment amounts.

House prices can go up – but they can also go down 

The housing market fluctuated over time. While house prices tend to go up over years, the property market can also have periods of weak growth and homes can fall in value. It can help to think of home ownership as a long-term plan.

Ongoing costs

Owning a home comes with a lot of responsibility, including keeping up with the maintenance of your home. When you're renting, if an appliance breaks or a maintenance issue arises, the landlord or property manager will arrange to have it fixed at no expense to you. These new costs are important to keep in mind. It might be a good idea for homeowners to have an emergency fund for the unexpected. 

There are also ongoing fees involved in home ownership such as shire rates and utilities, like water. Every year you'll receive a bill from your local council. This cost is based on the potential rental value of your home and covers the services and facilities provided by your council and the amount varies between councils.

You'll also receive bills from the Water Corporation for your water usage and the cost of providing you with water and drainage, plus bills for your utilities such as power, gas and internet. 

Flexibility

While owning a property gives you stability, renting provides you with more flexibility. If you're not sure what area you want to settle down in or you travel a lot for work, renting may be the better option for you.

Live where you want

Renting may provide more opportunities to pick a location that suits your lifestyle.

Low ongoing costs...and shared expenses

Renting has some financial benefits such as lower upfront costs. Generally, only a four or six week bond is required when signing a new lease, meaning there's no pressure to have a lot of money saved up. There's also the benefit of not having to pay for maintenance and repairs, freeing up your disposable income for yourself.

If you rent with a few others, your rent and utility bills are usually shared which can work out well financially.

Return for your landlord - not you

Your rent payments go to the owner of the rental property. When buying a home and paying off your home loan, you’re paying into an investment that may increase in value over a period of time, growing your wealth, not your landlord's.

Lack of stability

As much as renting gives you flexibility, it also brings a lack of stability. Leases are rarely longer than 12 months and there's the risk that you can be asked to leave with just one month's notice or less.

Rent inspections and rules

Regular property inspections can be a headache. Couple this with the fact that you’re unable to make major changes, renting can take away the feeling of home. It can be difficult not being able to put your personal stamp on your rental.

Rising rent prices

Perhaps the major frustration with renting is the lack of control you have over rent prices. Currenlly rents in the Perth market have been increasing signficantly with low rental vacanies. This can make for fierce competition to get a rental property.

There are many factors to consider when choosing whether to rent or buy, and there's no one size fits all approach. Weighing up the pros and the cons of your personal situation and doing your research is a good way to help you figure out what's best for you. We recommend seeking out independent financial advice from a professional to give you a better idea of your options before making your decision.