PaulandNic

According to the Halifax, the 'average' London home is currently £177 per month cheaper to buy over renting.

Ok mortgage rates are low as and I think property prices too, but it's always cheaper to rent than buy here.

Why is that?

bcworld

Negative gearing.

GarryP

http://en.wikipedia.org/wiki/Negativ...28Australia%29

It's a strange form of tax avoidance in Oz - doesn't imply the same thing as it does in the UK. Basically you take a loss on the property mortgage vs rent which can be offset against personal tax.

bcworld

And Aus is full of astute propery investors who actually seem to think its better to make a loss than be positively geared!

GarryP

I think the reasoning used to be that being negatively geared allowed you to buy a bigger/more expensive property than could sensibly be justified by the rent, which you could then sell in a bull market for even more money and play some games on the capital gains to keep the increase yourself.

Mind I've never really got my head around it - but it does seem popular and it does keep the rental costs down - at the price of an overpriced real estate market.

chris955

When we bought in Brisbane we were paying less to buy than to rent BUT then house prices went through the roof and the situation was reversed so it is a recent thing.