Buy or rent?

Home ownership is often described as the great Australian dream. At least two-thirds of  us choose to borrow to buy property rather than spend our lives renting someone else’s place. You often hear it said that paying rent is dead money and, for many Aussies, investing in their own home and getting that all-important foot on the property ladder has become something of an obsession.

But we’re not alone: studies show that there are similar levels of property ownership in the United Kingdom, United States and New Zealand. By contrast, in other OECD countries, such as Germany and Switzerland, rates of home ownership are surprisingly low at around 50 per cent, although numbers are rising as more people catch on to the appeal of owning a home. Here in Australia, we not only love our properties, we also go mad for the TV shows and magazines that talk about property and garden makeovers. We want to add value to our investment, but we also want to make it look good, so we can take pride in it when we invite people over.

When a property is bought with a view to renting it out, it’s important to remember that homes can take some time to lease, and that this can create a tricky financial situation for the new owner. But as long as you get the sums right and factor in a little breathing space to secure the right tenants, your purchase should prove to be a sound long-term investment.