Budget buster

New Zealanders are crazy about property. A big chunk of our net worth is tied up in houses, and it’s part of our national mythology. But the almost religious belief that prices will keep going up forever is starting to conflict with reality.

From a narrow financial perspective, home ownership doesn’t look so hot anymore. Is it still worth getting into the market?

Here are five strong arguments for buying a house, none of which have anything to do with property prices:

1. Forced savings plan

There’s a substantial gap between the cost of renting, and the cost of home ownership. In theory, a savvy renter could save and invest the difference. In practice, most people tend to just spend more on other things, like cars and holidays.

The best thing about a mortgage is that it forces you to save, for decades. It doesn’t require ongoing voluntary effort. You make your repayment, and have no choice but to make do with whatever’s left over.

2. Lack of liquidity

It’s a benefit, in a weird sort of way. One of the key factors to investing success is riding out the ups and downs, without trying to be clever. People who trade constantly almost always do terribly, compared to those who buy and hold for decades.

If you invest in shares or other liquid assets, you can trade them in a matter of seconds. By contrast, houses usually take weeks to buy or sell, which makes it much harder to make a rash decision.

3. Moving costs

The flexibility of renting is great when you’re in the ‘‘minimalist wisp’’ phase of life, and don’t