Increasing numbers of people rent accommodation in New Zealand compared to the percentage of home-owners 30 years ago. This increase is not only because house values have skyrocketed in recent years. Other factors can make renting a wiser option in the meantime.
Lifestyle
My father spent almost his entire working life based in the same building in central Wellington, employed by The Department of Civil Defence, even though his career included some international travel with that Department. Those days of staying put in one job seem long gone as we now live a far more mobile and technologically advanced lifestyle. It's not unusual to find people on short-term contracts, or temping, working from home and meeting clients in cafes, or simply advancing their careers through varied job experiences. Couples are also holding off from starting a family much longer than they did 30 years ago.
According to Statistics NZ figures in 2012, half of those who earned wages and salaries were employed in their present job for less than 18 months! So an important question we should ask ourselves is, do I want to be stuck living permanently in one place when the adaptability of renting can be more to my advantage. You may think “oh well, I could always rent my house out if I want to move again”, but becoming a landlord means your house becomes a business and this will demand a lot of your time, additional expense and potential hassles that may not be to your advantage.
Costs
On average over 11,000 properties are rented each month in NZ (see www.interest.co.nz 'Rent or Buy Report'). Wellington is presently considered generally less expensive to rent than to buy, despite the fact that Wellington's median rents have increased an astonishing 30.5% in the past five years, according to Trade Me Property figures.
Renting is not a waste of money as there are a number of considerations to be made when weighing up the options of renting verses owning your own home. Factors that determine buying a home are affordability, house price, interest rates, income, insurance and rates.
It’s important to remember that renting means you are buying accommodation, a necessity just like you buy food, clothing and electricity. There are plenty of costs involved in buying a home that you don’t have to fork out while renting. These ownership costs include maintaining a mortgage; which means paying large amounts of interest over and above repaying the principal, continual grounds and building maintenance costs, rates, insurance, internet and TV installation and TIME.
Wellington is presently “generally less expensive to rent than to buy.”
A renter can save the difference that home ownership would otherwise cost while renting in a location that, for example, also requires much less travel (thereby saving yet more money), until they are in a more desirable position to buy.
Sharing
Shared accommodation can be another great way to live economically for a season and save, especially if you don’t have any children. There are advantages moving in with people who know the local area, and you automatically reduce the need to buy furniture and appliances, whilst saving your time and costs on internet and electricity. Take a look at our room by room rentals, listed on our Dominion Property Management website. You gain a lockable bedroom in a quality home with shared common areas such as living room, kitchen/dining and bathroom, with the white-ware, TV, WiFi, electricity, and even a cleaner all provided!
Why Buy?
It can be wise to rent and hold off buying while housing is so expensive. Historically house prices rise, including booms, and then plateau or fall. There is often an underlying emotional reason that compels people to buy or sell, including fear that if they don’t buy now they’ll miss out, so the increased demand for housing will contribute to pushing up the cost. Or people feel compelled to sell now because house values are dropping and they don’t want to lose too much value, which triggers a reaction from others to do the same, resulting in prices dropping further, sometimes quite dramatically.
Finally, if you’d like some practical assistance in the rent or buy decision-making process, here’s a great tool recommended by interest.co.nz that may help you.