Top 10 Reasons NOT to buy a house
1. It ties you down
If you sell one $600,000 house and buy another it will cost you about $30,000 (agent’s fees, legal fees and stamp duty) just to sell and buy again. This makes it expensive to move for job opportunities, love, or just for fun.
2. The future is uncertain
People will buy a house that suits them NOW. You might by a unit in a trendy area but 2 moves later you’ve got 2 dogs, 3 kids and a house in a suburb with good schools. All of that is great but it cost you $120,000 in change due to expenses.
3. No Home Maintenance
If you rent you don’t have to spend your weekends painting, doing yard work, cleaning gutters etc.
4. No DIY
If you’re renting you don’t have to worry about redoing the kitchen or the bathroom which will cost you tens of thousands to only look out of date 6 months later.
5. No expensive repairs
When renting, you don’t need to worry about air conditioners dying, hot water systems exploding, or ovens not working any more. Sure, these are inconvenient,but you don’t have to suddenly find $2,500 to replace the air conditioner.
6. It’s more expensive
The average rent in Brisbane is $400, the average sale price including legal fees and stamp duty is $532,000. The average mortgage repayment plus the costs of owning a house (rates, water,etc) equals about $700/week. That’s a $300 difference! At historic rates of rental rise it will take 14 years to catch up.
7. Your own home might not be the best investment
If you invested that $300 per week in shares 30 years later you’d have $4.14 mil in shares vs having a paid off house worth $1.8 mil (30 year average return shares 10.8% vs 7.01% property)
8. You don’t have a mortgage
Without all that debt you don’t have to watch TV the first Tuesday of every month to see if the RBA kept interest rates on hold. If things get tight you can move somewhere cheaper temporarily. Not having a mortgage keeps you flexible and nimble.
If you don’t have a big oppressive mortgage you can use the left over money to start saving, investing or to start a business. Most people can never quit their jobs because they’ve “got a mortgage to pay”.