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Buy Your Home or Rent Someone Else’s?

With the recent movement in the market, I am seeing more and more articles in the media that are arguing the point that we would be better off to rent than buy our principal place of residence. They cite many different reasons to justify their position such as it offers a better lifestyle and allows us the opportunity to have more “toys” in our life with the extra disposable income. 

What I see is that these arguments fail to take many key factors into account. 

One of the first key arguments is that most typical consumer goods such as cars, an overseas holidays etc., will depreciate in essence actually leave you, the consumer with nothing to show for them at the end of the day. 

Another factor they fail to address is that rent prices are aligned with supply and demand which typically makes rental prices go up faster than the CPI; this in essence means that same proportion of your income will proportionately buy you less rental accommodation over a given ten year period.  

If we weigh this up against someone who makes the decision to buy a home, in that same ten year period, the capital growth of their home has typically lead to them having a property that has doubled in its value. 

We are now in a society, where the both general media and clever marketers push for use to look for instant gratification. They focus on us looking for immediate lifestyle benefits rather than seeing the value of deferred gratification. 

The contradiction of a quick fix lifestyle is that it is that the more we depend on it, the less attainable it becomes. Incomes rarely keep pace with inflation, and we as consumers become psychologically more dependent on the lifestyle we have now become accustomed to. 

Those who do decide to invest in their own home naturally also develop a greater sense of pride in that property and it is that pride of home ownership which will make you want to focus on improving your home which in the long term will provide you with a great asset, which in most cases will be tax free, should you decide to sell, but in the meantime it will offer you the kind of stability that will enable your family to plan their lives with a much greater degree of certainty.

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