Total rent costs over 25 years equal $780,000 (less the deposit not paid) = 621k Total rent costs over 30 years equal $ 936,000 (less the deposit not paid) =777k
So you'd be approaching 35 years in the rental property before you have spent as much as you would have if you had bought it.
Ten years more. And that's with rock bottom interest rates.
And yes, I know rents rise. But like IRs they fall too.
Real house prices have increased at an average annual rate of slightly less than 2½ per cent since 1955. If this rate of appreciation is expected to continue then our estimates suggest that houses are fairly valued (see Table 1 or Figure 3). As we discuss in Section 7.1, forecasting house price growth is subject to considerable uncertainty. That said, many observers have suggested that future house price growth is likely to be somewhat less than this historic average. In that case, at current prices, rents, interest rates and so on, the average household is probably financially better off renting than buying.
The situation would be far worse in Sydney in terms of the rent cost v mortgage costs ratio and thats one of the main reasons its totally overvalued.
Sydneyite
1 Oct 2015, 08:25 PM
So you pay $1750/month in rent? $400/week?
Regardless, you make the classic bear mistake of basing your decision comparing only the first year mortgage costs compared to your current rent. Keep renting - it probably suits you better! You might want to research the concept of net present value of cash-flows analysis to learn how to do a proper rent vs buy comparison.
Bullshit argument.
You borrow a set amount. How much you pay back is governed by interest rates.
Big rise in interest rates= big rise in your housing costs.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
Total rent costs over 25 years equal $780,000 (less the deposit not paid) = 621k Total rent costs over 30 years equal $ 936,000 (less the deposit not paid) =777k
No rent rise for 30 years , lets be realistic now and up the rent by 2 pc pa (less than inflation to be conservative)
Not sure what you mean there! Does the mortgage cost gets lower on 2nd year?
If you are paying P&I the interest component of the payments reduces with each payment. As long as interest rates do not go up. PeterIf I was super rich I would not own a house. Peter
If you are paying P&I the interest component of the payments reduces with each payment. As long as interest rates do not go up. PeterIf I was super rich I would not own a house. Peter
Some of us own, and rent. Weird heh!
WHAT WOULD EDDIE DO? MAAAATE! Share a cot with Milton?
Total rent costs over 25 years equal $780,000 (less the deposit not paid) = 621k Total rent costs over 30 years equal $ 936,000 (less the deposit not paid) =777k
So you'd be approaching 35 years in the rental property before you have spent as much as you would have if you had bought it.
Ten years more. And that's with rock bottom interest rates.
Jeez you are getting more and more hopeless Veritas! Two MAJOR problems with your analysis:
1) You forget the owner ends up with an asset worth $??? after the 25 or 30 years! Duh! 2) Rents rise in the long term always due to baked in inflation - you cannot ignore that
I would have thought after years on this forum you could at least to a better rent/buy analysis than that pathetically flawed attempt there.
You are beyond hope - please just keep renting. But when you are old and poor don't come crying like the big socialist you are asking the government to take more money from people like me to give people like you more than a subsistence lifestyle.
Jeez you are getting more and more hopeless Veritas! Two MAJOR problems with your analysis:
1) You forget the owner ends up with an asset worth $??? after the 25 or 30 years! Duh! 2) Rents rise in the long term always due to baked in inflation - you cannot ignore that
I would have thought after years on this forum you could at least to a better rent/buy analysis than that pathetically flawed attempt there.
You are beyond hope - please just keep renting. But when you are old and poor don't come crying like the big socialist you are asking the government to take more money from people like me to give people like you more than a subsistence lifestyle.
+1 - the denial of the obvious is just amazing.
Any expressed market opinion is my own and is not to be taken as financial advice
Ignore posts by The Whole Truth · View Post · End Ignoring The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
Yea. We have had so many threads like this. All the decent spreadsheets / calculations etc generally show (with reasonable assumptions) that buyers are better off as long as long term house price appreciation is > 1% or so. That's for OOs of course.
For Aussie property bears, "denial", is not just a long river in North Africa.....
Yea. We have had so many threads like this. All the decent spreadsheets / calculations etc generally show (with reasonable assumptions) that buyers are better off as long as long term house price appreciation is > 1% or so. That's for OOs of course.
Three people have brought up rising interest rates and you've totally ignored that point. Care to engage with it?
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