IT’S a lie to say that numbers don’t lie. This is especially true in the real estate debate about whether you are financially better off renting or buying a house.
Crunching the numbers for this argument can produce almost any answer you like, depending on the assumptions made for factors such as interest rates, house prices, rental costs, investment growth and tax deductions.
And, of course, there’s the matter of trying to save up the tens of thousands of dollars it usually takes to build a deposit.
The “rent money is dead money” line is a fair claim in many cases, but things can get murky when the money saved by renting is invested elsewhere typically shares or an investment property that have tax incentives.
It’s easy enough to compare the basics. For example, Brisbane’s median asking rent for a house is $360 a week, according to a report by Australian Property Monitors. The median house price for Brisbane is $419,000, says the Real Estate Institute of Australia.
The interest cost of a $419,000 loan based on a 6.5 per cent interest rate is $524 a week, and for an 8.5per cent interest rate it is $685 a week. But the basics just don’t tell the full story.
Damon Nagel, managing director of property investment firm Ironfish, says most people don’t consider the long list of other factors that affect the renting versus buying decision.
He says people can benefit by owning investment property while themselves living in a rented residence, although these “rental investors” are uncommon.