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Housing: RENT vs Buy?

Housing: RENT vs Buy?

Old Oct 6th 2007, 2:44 am
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Default Housing: RENT vs Buy?

hi all,

sorry if this was asked before. would just like to get your thoughts on buying vs renting in this crazy market.

what i would also be interested in hear is what are the costs involved for when you sell a house in oz?

e.g. if you buy a house for $390k then sell it after 3 years for the same price at $390k, i heard someone mention that there would be some associated costs involved ( up to $25k++)? is that true? anyone know what these costs would be?

Thanks
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Old Oct 6th 2007, 3:13 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by obiwan View Post
hi all,

sorry if this was asked before. would just like to get your thoughts on buying vs renting in this crazy market.

what i would also be interested in hear is what are the costs involved for when you sell a house in oz?

e.g. if you buy a house for $390k then sell it after 3 years for the same price at $390k, i heard someone mention that there would be some associated costs involved ( up to $25k++)? is that true? anyone know what these costs would be?

Thanks
If you are looking at a 3 yr period then rent.Nobody can predict what the house price will be in 3 yrs time.

The costs are the entry and exit costs,depends on the area you buy and whether stamp duties etc need to be paid.

Very basic would be say borrow 300K @ 8%,cost for 3 yrs is 72K ,plus rates ,say 80K.You can rent a house for a lot less than 80k for 3 yrs.

To that add stamp duties etc if they need to be paid.Cost of buying a house for 3 yrs could be 110-120K,rent possibly 45K.

Should the house price rise by 100k then you have lived virtually rent free for 3 yrs.Should the house price fall you have lost even more money.Nobody can answer the question,you need to work out the numbers for yourself and do a financial model for various scenarios.Nobody can predict the future.
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Old Oct 6th 2007, 7:02 am
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Default Re: Housing: RENT vs Buy?

Adding to what G_D said, I've found that while properties in some suburbs are increasing in value, so suburbs are seeing a drop in values (Melbourne, Victoria).

Whilst the statistics available on the net are dubious to say the least, it does point to the fact that cheap areas ($390,000 is cheap unless your talking a 2 bed in an ok area) aren't seeing much growth - it's the expensive areas that are seeing the money go up.

As G_D said - if it's only for 3 years - rent. Maybe if it's 5 years+, buy.
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Old Oct 6th 2007, 10:47 am
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Default Re: Housing: RENT vs Buy?

its easy rent and have money in your pocket or buy and stay skint......
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Old Oct 7th 2007, 2:37 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by geordie downunder View Post
If you are looking at a 3 yr period then rent.Nobody can predict what the house price will be in 3 yrs time.

The costs are the entry and exit costs,depends on the area you buy and whether stamp duties etc need to be paid.

Very basic would be say borrow 300K @ 8%,cost for 3 yrs is 72K ,plus rates ,say 80K.You can rent a house for a lot less than 80k for 3 yrs.

To that add stamp duties etc if they need to be paid.Cost of buying a house for 3 yrs could be 110-120K,rent possibly 45K.

Should the house price rise by 100k then you have lived virtually rent free for 3 yrs.Should the house price fall you have lost even more money.Nobody can answer the question,you need to work out the numbers for yourself and do a financial model for various scenarios.Nobody can predict the future.
thanks for the replies guys,

and to GD for pointing out the entry and exit costs, i guess to add to the exit costs would be broker commissions? so would that be another 5% of the selling price?

am currently living in a shared accomodation in bayside brisbane, will start looking for a rental for when my family follows in Feb.

cheers
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Old Oct 7th 2007, 4:46 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by geordie downunder View Post
If you are looking at a 3 yr period then rent.Nobody can predict what the house price will be in 3 yrs time.

The costs are the entry and exit costs,depends on the area you buy and whether stamp duties etc need to be paid.

Very basic would be say borrow 300K @ 8%,cost for 3 yrs is 72K ,plus rates ,say 80K.You can rent a house for a lot less than 80k for 3 yrs.

To that add stamp duties etc if they need to be paid.Cost of buying a house for 3 yrs could be 110-120K,rent possibly 45K.

Should the house price rise by 100k then you have lived virtually rent free for 3 yrs.Should the house price fall you have lost even more money.Nobody can answer the question,you need to work out the numbers for yourself and do a financial model for various scenarios.Nobody can predict the future.
very good thread never looked at it that way, I always thought that buying was win win win, Paul
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Old Oct 7th 2007, 5:27 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by obiwan View Post
thanks for the replies guys,

and to GD for pointing out the entry and exit costs, i guess to add to the exit costs would be broker commissions? so would that be another 5% of the selling price?

am currently living in a shared accomodation in bayside brisbane, will start looking for a rental for when my family follows in Feb.

cheers
Nobody really knows the full impact of the global credit crunch yet - especially on the area of mortgage finance known as securitisation. By Feb you should have a much clearer picture of how the money markets have repriced risk, which will filter through to real estate all over Australia.

Mark
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Old Oct 7th 2007, 8:45 am
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Default Re: Housing: RENT vs Buy?

i was thinking of that too...

i have been monitoring the housing prices in the US since 2000 and have seen how people were just buying and buying because everyone thought the prices would just keep going up....

at least in the US there were already a lot of warning signs in the newspapers articles.....so when prices started coming down it was not too big of a surprise....

but i just dont understand oz.....you read the Courier Mail and they have articles saying prices will appreciate 40% in the next 3 years or so....

then you have articles saying the more people will be under severe housing stress in the next 2 years.....

if only there were just more supply of rentals:curse:, i would just rent in the meantime and see how things go in the next 18 months....
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Old Oct 7th 2007, 8:46 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by rangersman2 View Post
very good thread never looked at it that way, I always thought that buying was win win win, Paul
i thought so too, i hope to research more on the entry and exit costs for brisbane....
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Old Oct 7th 2007, 9:41 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by obiwan View Post
i was thinking of that too...

i have been monitoring the housing prices in the US since 2000 and have seen how people were just buying and buying because everyone thought the prices would just keep going up....

at least in the US there were already a lot of warning signs in the newspapers articles.....so when prices started coming down it was not too big of a surprise....

but i just dont understand oz.....you read the Courier Mail and they have articles saying prices will appreciate 40% in the next 3 years or so....

then you have articles saying the more people will be under severe housing stress in the next 2 years.....

if only there were just more supply of rentals:curse:, i would just rent in the meantime and see how things go in the next 18 months....
Blame cheap credit and a relaxation of mortgage lending standards for the US debacle. Australia is in a better position in theory, because it has a smaller portion of sub-prime/lo-doc. However a lot of the non-bank lenders here get their money from overseas, through selling residential mortgage backed securities (RBMS) (basically a whole pile of mortgages lumped together into a big fund). The global wholesale market for these has totally dried up, so the lenders will be scratching their heads in the next couple of months with regard to some types of mortgages as their funds diminish. The banks are in a better position, but they too have made use of securitisation to extend credit. If you are old enough to remember how hard it was to get a mortgage in the UK before the 80's (suit & tie, a few years with the same bank, impeccable credit and then 3 times your income), you get an idea of how mortgages would be without securitisation. The stuff you read in the press is a projection based on the housing market itself and takes no account whatsoever of the money markets which underpin it.

Mark
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Old Oct 8th 2007, 7:47 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by obiwan View Post
thanks for the replies guys,

and to GD for pointing out the entry and exit costs, i guess to add to the exit costs would be broker commissions? so would that be another 5% of the selling price?

am currently living in a shared accomodation in bayside brisbane, will start looking for a rental for when my family follows in Feb.

cheers
If you need any help with finding a rental just let me know...I am an Englisg Real Estate Agent working out of Bayside, Brisbane.
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Old Oct 8th 2007, 11:33 am
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Default Re: Housing: RENT vs Buy?

Originally Posted by Shortlets View Post
If you need any help with finding a rental just let me know...I am an Englisg Real Estate Agent working out of Bayside, Brisbane.
fantastic, will PM you in early Jan. 2008 (i am assuming it could take more than a month to get a rental) which is the time i actually need to get a place for my family who will arrive in March 2008......i am looking specifically for anything near the wynnum central station since my kids have been accepted in a school there....

i know that rentals are really tight so i am considering paying lots of advance rental just to secure a place......looking for a small house or unit....

let me know if it is a good idea to put in an application as early as now. it will be wifey + 3 kids....

cheers
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