When Does It Make Sense To Rent vs Buy?
The Toowoomba property market is on the up and up, which means it could be the right time to buy.
However, renting might be better if you need to save a deposit and explore whether a new suburb is the ‘right fit’. It all depends on your individual needs, and your long term goals and finances, so let’s break down the age-old question of when it makes sense to rent vs buy.
The current state of the Toowoomba property market
There was plenty of doom and gloom around housing prices in early 2019, but a few lucky regions managed to avoid most of the downturn. The Toowoomba property market, in particular, was recognised as “one of the best places to escape Australia’s housing downturn”.
So with the market back on track – and some experts even saying we’ll see record highs in January 2020 – could now be the smart time to buy? It depends on a number of factors. For example, Middle Ridge didn’t really see any downturn at all, and house prices have stayed steady throughout the year. Some of Toowoomba’s boom suburbs, however, could make smart investment options if you snap up a deal before the market really picks up again.
In other instances, saving for that perfect home while you rent in Toowoomba could be the right move. Let’s explore your options.
It makes sense to rent in Toowoomba if you…
…still need to save for a deposit. No matter what the market is doing, you need to make sure you’re financially ready to buy before taking up the mantle of homeowner. Some may consider renting ‘dead money’, but when it’s a short-term solution to save enough for a deposit then it’s a very smart idea.
Another reason why people continue renting in Toowoomba is because they can stay close to the action. If your budget means you can only afford to buy on the outskirts of town or even travel further afield into Withcott or Highfields, then renting means you can still be close to amenities like school, work, public transport and shopping centres. Renting can be a long-term lifestyle choice.
Then there’s the financial side of things. When you’re renting you won’t have to worry about paying council rates, repair bills and ongoing maintenance fees – not to mention get stressed whenever the market fluctuates.
It makes sense to buy in Toowoomba if you…
…are financially ready. So you’ve saved up enough of a deposit to buy a home within your price range and in a good suburb. If possible, you’ll want at least 20% of the purchase price saved up so you can avoid paying lender’s mortgage insurance. Also, if it’s your first time buying, you may be eligible for the Queensland First Home Owner Grant – which can be a big relief on your bank account.
It also makes sense to buy if you’re looking to settle down for a number of years in one location, especially if you’re starting or growing a family. Buying means you won’t be subject to rental price hikes every six or 12 months, and so long as the market stays steady you’ll have a major asset that keeps appreciating in value over the long term.
Buying will also see you build equity in your home, which can help if you plan to buy a second home in the future and rent out your current property. It also means rather than paying increasingly higher rents every year, your monthly costs should lessen over time since you’ll be paying down your mortgage.
The advantages of either buying or renting
The bottom line is that the decision to buy or rent will depend entirely on your circumstances. There’s no one-size-fits-all solution for everyone, so it’s up to you to do your own research and find out which option will work for you right now.
A good idea is to create a pros and cons list of either buying or renting. To help get you started, here are some hard-and-fast advantages of both options:
Advantages of buying
- Build equity in an asset that will grow in value over the long term.
- Tax benefits for homeowners.
- Freedom to renovate and decorate as you desire.
- Ability to stay in your neighbourhood and home for as long as you choose to live there.
- Potential to earn rental income in the future if you buy and move into a second home.
Advantages of renting
- Never have to pay rates or bills to maintain the property.
- Freedom and flexibility to move to a different suburb at the end of your lease.
- Your rent won’t change as interest rates fluctuate – like they do for mortgage repayments on a variable home loan.
- Some utilities like water, or services like gardening, may be included in your rental cost, depending on where you live and your rental agreement.
- Financial checks are quick and easy compared to the long process of purchasing a home.
Find the perfect home in Toowoomba
Whether you’re ready to buy or prefer to rent while you save for that dream home, we can help you find the perfect property that meets your needs. Contact an experienced local agent today and take the hassle out of property hunting.