Data be­hind old de­bate

Own­ing a home might be tough in the first few years, but it does force you to save and hope­fully cre­ate a sta­ble fi­nan­cial fu­ture

Weekend Gold Coast Bulletin - Property - - AUCTION -

TO BUY or not to buy ... Is buy­ing your home re­ally the best fi­nan­cial de­ci­sion you can make?

The age-old ques­tion has been not only asked once again, but ap­par­ently an­swered re­cently – by some clever types from Mel­bourne Univer­sity.

The two economists in­volved stud­ied the pe­riod from 1983 to 2005, tak­ing into ac­count all mat­ter of data in an at­tempt to ad­dress this de­bate.

As a real es­tate fan I was de­lighted, al­though not al­to­gether sur­prised, by their find­ings which in­di­cated most peo­ple would have been fi­nan­cially bet­ter off over the long-term had they pur­chased a home to live in rather than per­ma­nently rent­ing.

My ex­pe­ri­ence is noth­ing more than many years in and around the real es­tate in­dus­try, but that would have led me to the same con­clu­sion.

In modern Aus­tralia, for any of us to pre­pare for the fu­ture fi­nan­cially most have to in­vest part of their in­come for later years, hop­ing it will grow suf­fi­ciently. Real es­tate is just the most pop­u­lar way of do­ing this, it is an in­vest­ment ve­hi­cle where the fun­da­men­tals are un­der­stood and it feels like the tan­gi­ble op­tion.

From all the data sup­plied, the one el­e­ment I re­ally be­lieve we all need to ac­knowl­edge is that to be able to opt out, or if you are forced to due to val­ues in your area be­ing pro­hib­i­tively high, you have to make as big a de­ci­sion as if you were ac­tu­ally buy­ing a home.

What own­ing a home can do is force you to save.

Yes it will of­ten be fi­nan­cially very lean years as a new home­owner, but the hope is that time will make it eas­ier and set you on track.

Own­ing a prop­erty you live in is no guar­an­tee of fu­ture prof­its, if you have bit­ten off more than you can chew and the mar­ket takes a dive. Then you’ll be des­per­ate to start rent­ing and es­cap­ing the night­mare.

For most how­ever a few bad years are com­pen­sated long term, the trick is to ac­knowl­edge the bad times if they oc­cur, not bury your head in the sand.

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