Owning vs Renting: Let’s Look at the Numbers

There are benefits and drawbacks to both owning and renting a house. Depending on your financial and home front situation, arguments can either go for renting or buying a house. If you are single and don’t have the money to pay the required downpayment to a home purchase, renting a studio apartment or a small house is more sensible than trying to buy a house. This is especially advantageous to people who have jobs that requires them to be always on the move. The choice becomes more complicated when one is starting a family or has the capability of buying and investing in Brisbane real estate.

The argument right now is whether buying a house is financially better over the years. Capacity to buy and real estate needs are set equal. Let us exclusively consider the financial aspect of buying a house versus renting accommodations.

As most people considering of buying homes are families with young children or early retirees, all figures presented pertains to a two bedroom house outside CBD.

Monthly expense comparison between renting and owning a house.

At first look, renting a house looks like the more sensible choice. Let’s go further into our analysis;

This is the first two years of your repayment schedule for a $300,000 loan at fixed 5% with 20% down payment for 30 years term. These figures are average to a two bedroom house in the suburbs.

Five year repayment schedule of $300,000 loan at 5% for 30 years.

What happens after five years of renting or paying mortgage? The table below takes into consideration the rent increases. Rental caps to real estate in Brisbane is about 1.4%. Property appreciation for the last five years averaged about 8%, but we’ll use a more conservative number and compute at 5%. We will also add in the possible interest earned had the deposit been invested elsewhere instead of paid for a house. The equity paydown is the total equity you’ve paid off in the period of 5 years.

After five years and considering all financial factors.

Given all other factors to be equal and constant, the numbers favor owning a house to renting one. Call us for a more detailed and specific real estate analysis and for your best options of buying homes in Brisbane.

Click here to get in touch with the best real estate agents who can help you find property investments or sell your home.