New government data has shown that renting in New Zealand is now more affordable than buying, according to the Housing Affordability Measure (HAM) released last week.
The latest results show a gradual increase in housing unaffordability, with four-fifths of potential first home buyers not being able to comfortably afford a house in New Zealand. Although the new measure is only current to June 2015, and is still in the "experimental phase", it could be easy to look at this and think that you would be better off to keep renting.
But would you?
I think the key here is to really look at your personal situation. If you can’t afford a home, then now is not a good time to buy. However if you can afford the deposit and it’s not going to stretch you too far - then owning your own home enables you to have a long term asset. The added stability of not being booted out by a landlord, being able to own pets or maintaining a garden are added life bonuses that may make owning a home best for your circumstances.
There are always going to be situations where renting is definitely the best option - maybe you travel, or you’re not ready to settle down, and can’t maintain household issues. It really comes down to individual circumstance and what is right for your situation.
The key is that when you are ready to buy your own home that you ensure you have a big enough deposit and you do your homework to ensure that payments are affordable. Getting a pre-approved loan will draw a line in the sand for you. Talk to a mortgage adviser about your situation to see what can be done now. You may be in a better position than you think!
In some circumstances there may be options to buy where you can afford, and rent where you want to live. For example your budget may allow to buy a house in Featherston, and get on the ladder, but you want to live in the Wellington CBD. In my opinion do whatever you can, when you can, to get on the property ladder sooner rather than later!
If you need any help with this, make sure you have a chat with our friendly team.