Should you rent or buy in 2022?
As 2021 ended with a bullish increase in house price and rent, one of the biggest questions for anyone looking for a place to live in Australia is to consider, should you buy or rent? In this article, we will explore this age-old debacle.
Price is predicted to increase
According to REIWA, Perth’s property market will rise a further 10% next year, following a 14% growth in the past year. The median rental price is also estimated to increase between 10 to 15% in 2022.
Western Australia has some of the most affordable housing in the country due to its COVID-19 policy and it also has one of the strongest economies in the world. As there is a shortage of houses for sale and rent all these factors will point towards another strong year of growth. This will attract potential investors to stock up on their property portfolio due to the available low-interest rates.
Low-Interest Rates
Interest rates would continue to remain relatively low, and it is still possible to get a loan from a 1.99% variable rate. So now let’s compare how buying a house may be significantly more affordable compared to renting.
Case Study
With the current median house price sitting at $520,000, if you are to borrow at 80% to exclude the lender’s mortgage insurance, that would equate to a loan of $416,000. Taking this figure at an interest rate of 1.99% for a repayment term of 30 years and paying principal and interest, the repayment would equate to $366 a week.
According to REIWA, the average rent for a property in Perth sits around ~$450 a week for a house. This makes it cheaper to own a home than to rent one.
What if I don’t have a 20% deposit?
But what if I don’t have a 20% deposit? The good news is some lenders will be able to help you to purchase a property with as little as a 2% deposit.
It makes sense to buy since, Perth’s average weekly rent has also skyrocketed to a six-year high, creating a massive win for landlords while tenants are faced with steep increases in a fiercely competitive market.
Thanks for reading and as usual, if you are interested to find out more about securing a house or commercial loan, feel free to contact us as our consultations are always free.
