Is Now the Right Time to Buy a Home

by como ·

Your mother was right! Mothers like stability, and nothing says
it more than owning your own home – it’s the ticket to sitting at the
big people’s table and being treated as an adult. Talk to anyone over
the age of forty – or most people in a suit – and they’ll no doubt
advise you: ‘Buy a house as soon as you can, start paying it off, it’s
the best investment you can make.’

While it’s true that if you
plan on living under a roof for the next fifty or so years, it’s
probably a good idea to eventually buy a house, but the notion of ‘buy a
house as quickly as you can’ is based more on emotion than logic. This
is a weird aspect of the financial world – there seems to be an
undertone of largely condescending advice that presupposes there is just
one correct path, one correct action for everyone to follow.

I’m not dissin’ the great Australian dream, just merely highlighting
that home ownership isn’t solely a financial decision – it’s an
emotional one as well. Far better for me to discuss both sides of the
home ownership coin and let you reach your own conclusion. Let’s take a
look at some of the advantages of owning your own home, followed by some
of the disadvantages.

The up side

Forced savings
– Owning your home forces you to get serious about reining in your
spending and start sorting out your money situation – nothing beats
regular mortgage repayments to make you save. The forced discipline of
regularly paying off an asset over many years is the reason most people
make money out of property over the long term.

If you purchase a home and live there before (hopefully) selling it at a
profit, no capital gains tax is paid, unlike investing in shares (or
property in which you don’t live), where a proportion of the profit you
make is taxed at your marginal tax rate. Huh? Look, tax is boring, tax
costs you money – tax sucks. Just remember this – if you sell the house
you live in and make a zillion bucks profit out of it, you don’t have to
share it with the Government, and these days pretty much everything is
taxed to some degree, so it’s a sweet deal.

Owning your own home allows you to add your own personal touch to the
place where you live. Take the ‘hit’ of home renovation and you can
spend cosy weekends at Bunnings, wild nights at Ikea – even use your
hydroponics skills to grow a real vegie garden. If you rent there’s not
much point in repainting your bathroom, because (a) it’s not your house
and (b) you’re probably going to move on in twelve months or so.

King of your castle
– Being the king (or queen) of your castle means you’re not at the
mercy of a landlord or real estate agent. If you rent, your house can be
sold, or your lease may not be renewed, which means that you may be
forced to move every couple of years. There’s also what I call the
‘aggro effect’ of renting – applying for properties, surprise
inspections, snooty property managers and crazy landlords. Lassie also
gets a rough deal here. He may be able to save drowning kids from lakes
and faithfully deliver your paper each morning, but that doesn’t usually
cut it with landlords, many of whom stipulate a no pet policy. Then
again, I’ve lived in plenty of places that were home to a colony of
cockroaches, as well as a family of mice, and that didn’t seem to bother

Emotions – While it’s different for everyone,
most people would agree that owning a home packs an emotional punch.
It’s stability in your life. There’s a certain sense of pride in
actually owning a little chunk of Australia. It’s the warm fuzzy feeling
you get when you stand by the fireplace and admire the fact that you’ve
now got something behind you that is uniquely yours.

The down side

– You’d have had to be living under a rock for the past ten years if
you didn’t realise that property prices have skyrocketed. In order to
get a foothold in the property maker, purchasing a home in any of our
major cities (and increasingly in the regional towns) involves taking
out mortgages for seriously big bucks – and a huge mortgage equals huge
repayments. I’ve got friends who’ve purchased homes, and the repayments
have significantly changed their lives. I’m not talking about delaying
that trip to the Bahamas; they feel it in the small ways, like fretting
over going out for Sunday brunch.

Yet more costs – When you
purchase a home there are significant upfront costs involved, such as
stamp duty, conveyancing, fees associated with getting a mortgage, and
ongoing costs (that renters don’t pay) such as council and water rates.
When you rent you don’t pay any upkeep, which means for any repairs all
you have to do is ring up your real estate agent, who’ll arrange for a
handyman to fix them, and the landlord gets lumped with the bill.

– The freedom of renting enables you to pretty much pick up, pack up
and go. You’re not constrained by mortgage repayments, and that allows
you to stay somewhere for a week, six months, a year or five years, and
always have the choice of packing up and going should you seek greener
pastures, get the travel bug, or move for a job opportunity somewhere

Putting it all together

You may be starting to
think that I’m anti-property. That couldn’t be further from the truth.
In my heart of hearts I’m a contrarian. Pretty simple really: sell when
people are buying and buy when people are selling. Sounds logical on
paper wouldn’t you agree? I want a home. I have a deposit. I’m sick of
renting. I can’t stand my landlord. I’m waiting. Patiently.

Riddle me this, Barefoot

Have you ever noticed that most of the people telling us to buy property are the people who are selling it?


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