To Buy or To Rent? Answer lies in the affordability

You will be surprised to know that Wellington defeated Auckland in the race of booming property prices as per latest House Prices Index which coined the fact that the housing price value increased by 14.3% in last the lap of 2016. The housing price growth of 16.2% was seen in Wellington region compared to 7.2% in Auckland. This reflects the overall hike in property prices in a mixed proportion.

The predominant question for the first home buyers is whether to rent a property or buy - which all depends upon one’s affordability and other important contributing factors. But the right move from renting a property to buying a property is worth understanding as soon as possible.

Lets see below 'assumed' calculation to conclude the best solution for property.

Here, the the calculation drivers play a major role in making the decision.

The household income comprises of both dependent for first home buyers had seen in an average of approximately $1500 where the normal two-three bedroom rental property (differ location wise) holds rent in between $350-$400. Household expenses and maintenance amount would give ones to calculate to save deposit for buying a house. For First home buyer, it cost approx 1/4th of Taxable income to pay rent. On the other hand purchase option, normally fixed interest rate for 1-2 yrs @4.25-4.5% on low rate mortgage home (in range from 400,000-500,000) would cost weekly payment in between $280 to $320 (Figures can be accurate with NZFS mortgage calculator on website homepage). Also, there would be other miscellaneous amount like insurance, household maintenance etc can add on to this weekly mortgage payment.

There is also another consideration of minimum deposit required of 20% asked from many banks which takes at least 3 to 4 years to accumulate it (depend upon one’s lifestyle).

Now to choose wisely for an option, renting is better attractive area than buying depending upon variables like Income Vs expenditure, other liabilities, interest rate offerings, property region etc.

It is better to keep saving and getting a good advisor will proportionally advise for wise move and NZFS team is capable enough to check out individual need.

By Mohammad Ayaz

Dated: 16 Nov, 2016.


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