The buy vs rent debate: which is best?

Rising property prices across the country are making the great Australian dream of owning a property a distant reality for many people.

While buying a property is a great long-term investment, tossing in your mortgage could also give you more choices in life – a fancy holiday, a flash car or just more financial freedom.

Also read: Why one family quit the Sydney property dream

By opting out of the decision to buy your own home, Aussies are also able to spread their financial risk, A&AT ceo Melissa Browne said.

“There is a great Australian dream of owning your own home and what I’m suggesting is not to reject home ownership entirely, but to think of doing something other than owning your family home – such as buying an investment property instead,” she said.

Browne explained that many clients go to her accounting firm with mortgages in the high six or seven figures, which strips them of any ability to invest in business, potentially look after a sick parent or even send their children to private school.

Also read: The car-free suburb of the future

Instead A&AT wants Aussies to look at property investment in a different way, instead of going down the traditional home ownership route, which will in turn give them more financial flexibility.

However, while one side of the age-old debate says renting rather than buying gives short term financial freedom, others argue that Aussies which aren’t working towards property ownership are effectively left without a long-term retirement plan.

“Over the last couple of decades property has been one of those assets that you can purchase, live in and form great history,” Colliers International managing director Peter Chittenden said.

“[Owning property] gives you choice. we have clearance rates in most capital cities of over 80% at auction so they can sell if they need to and it also gives you comfort [to know you home is financially secure].”

Also read: The new Sydney suburb that could change everything

However, Browne argues that if your one major investment and property ownership is your family home, you may be unwilling to sell because of the emotional attachment formed.

“[Aussies] with high six or seven figure mortgages [have] all their spare cash going into the mortgage,” she said.

“There are statistics out at the moment which show that its taking more than two average wages to buy an average home in our capital cities.”

Also read: How Sydney’s lockout laws are affecting property prices

“So by renting your own home and investing in other asset classes you are diversifying rather than just putting all your eggs into one basket,” Browne said.