Beoz

Excellent article here for the young.

http://www.news.com.au/finance/real-estate/buying/the-definitive-answer-on-the-rent-v-buy-debate/news-story/45a74a625872d7987317e8d39d0687e7

I was waiting for the punch line at the end, how much money you can actually make if done smartly by renting over buying.

Big fan of renting here, though I did buy a house, one thing not mentioned in the article is how you can own a place without wasting money on bank interest whilst maintaining a good level of disposable income - make sure you have a big proportion of deposit.

Gordon Barlow

A young fellow working for my stockbroker told me he had 100 Poseidon (1000, was it? I forget) and sold out right at the top of the market. I asked him how come he was still working, and he said "Ah, I invested in other stocks, didn't I? And lost every penny. Today I have $6000 in the bank - my savings from salary!"

I think I must have been a bit late to buy Poseidon shares, but I did manage to lose a fair chunk of what we had saved in Bahamas. Sigh. That's the way of the world. Fortunately, I was able to get another job to build up the kitty!

the troubadour

So big a fan that you don't practise what you preach. In a land where the purchase of a house/apartment is the closest most will arrive at a religion, it is a major break from norms to rent rather than purchase.


Now the maths behind are something I used quite a few decades back to justify not buying in London when in actual fact would have made a fortune if had done so.


But in this case one just arrives at the conclusion it is unaffordability pure and simple and nothing as heretic as renting costs winning out over purchase costs. The real estate and financial industries very quick to argue the opposite when in their interests. Now that the price has gone way above the heads of most earners they seek to appease the anger out there by claiming renting a feasible option.


Well it may be when protections are introduced as in other countries, not one sided, over whelming in favour of landlords and such limited protection for tenants. Here renting is a risk which ever way you look at it and just exasperates further what passes as the housing market in Australia.

the troubadour

Fortunes won and fortunes lost. An old story. Usually as we get a little older, sometimes even wiser, we take a more conservative view on risk.


At one point, obviously time will prevent the ability to make up losses, prudence becomes more the guide.


Darn nice feeling to have a bit in the kitty that will hopefully calm the waters to the likely rocky ride ahead. Sea legs and strong constitution will likely not go amiss to weather those storms ahead.

Beoz

For many years I did. In that time I was able to make good with disposable income via investments of other sorts that offered liquidity. You can't make good with other investments if you are piling it all into a mortgage.

I certainly did not buy before it became financially better than renting. As I said, that means a low mortgage.

Think of it as diversifying investments.

Yes but that would require 2 caveats.

1. You to buy 2 properties. One you lived and one as an investment. You would have only made money on the investment as you always need sonewhere to live

2. For you to forecast London property to increase like it did.

This is incorrect. Property is still affordable, but if you want a 3 bed house on a quarter acre block within 10km of Melbourne or Sydney, this is not an option for most first buyers. This is no different to 40 years ago.

However, what has changed is FHB can now afford a dwelling within 10km of Sydney and Melbourne because of the apartment explosion. It might be a shoe box but that my friend is commonly known as the "property ladder" and that ladder also existed 40 years ago.

Not sure what's going on in WA but in NSW renters are well protected. For example, if you are out of contract, to terminate a lease a landlord needs to be 90 days notice. Tenant only needs to give 21 days. Having done the rental thing in NSW for a number of years I thought it fair and skewed toward to tenant if anything.