Renting is the New Black

Can australia pay enough pension for people to rent until death?

 

I grew up always hearing that rent money is dead money and gotta get a place asap. There is definitely a different mindset about this for Anglos and ethnics. My Chinese, Indian, jewish, Italian and Greek friends family had the same mindsets . Don't **** around and own your slice of the pie.

I gotta say it resonates with me. But each to their own.

 

Yes the old "rent money is dead money" but of course so are all the costs of ownership other than principle repayments - stamp duty, council rates, insurance, interest payments, repairs & maintenance etc

But anyone who rented instead of owning thru this last boom has been smoked. Maybe a prolonged stagnation in prices will move a new generation towards the benefits of renting

 

And just when people congratulate themselves on being renters because prices have been stagnating.......

 

There are a lot of online calculators that demonstrate whether rent is better than ownership or not. Or it can be easily modelled, eg in Excel. It is not a rule, it depends on yield, growth and interest rates. Also it's important what a renter does with excess of funds - if they invest in other markets and it performs better than RE, rent is not dead money for sure. There is no simple "rent vs buy", there many other opportunities.

 

It's a 99 year lease on the land in Canberra but I think any government that tried to enforce that would lose so much popularity that they likely wouldn't do it.

 

@MTR talks about the property cycle regularly
Buying in a rising market and selling out prior to the bust (good logic).
Why not include renting into the cycle ?
Buy a PPOR in a rising market, sell prior to the bust (no tax), then rent vest (far cheaper than repayments cost) until the next rise in markets
Put your extra funds into LIC's in between
Should you actually want to build a property portfolio, build your funds and get into commercial @Beano ?
Or follow the cash cow @sash