Many Australians today who want to break away from renting and turn to home ownership are having difficulty. Houses for sale in many areas have risen and coupled with higher interest rates, the cost of home ownership can be high. At the same time renters are being faced with fewer rental properties to choose from and increasingly high rental prices. The higher rental prices keep the dream of home ownership further away for many. When you can barely afford your rent, how can you afford to put extra into savings for a home loan down payment?

Here is a look at some of the challenges faced today by Australians when it comes to renting vs. buying.

Listless Property Growth And Higher Interest Rates

Rental prices have been rising for the most part all over the country and landlords have been cashing in. Landlords have seized the opportunity and rent prices have been on the rise. According to RP data over the past year, rents have increased by 1.4 percent nationally and 2.7 percent in the capital cities and that trend is expected to continue as the rental market becomes more saturated.
“Renters should prepare for significant growth in rental prices throughout 2011, driven by accelerating economic activity, housing shortages and a depressed first homebuyer market,” said Dr Andrew Wilson, Senior Economist, Australian Property Monitors.
With the increasing interest rates and rising rental prices, many will be forced to remain in rental units. Those who do have the financial means and choose to buy in the housing market will be more likely to purchase on the smaller and less costlier side of the market as many home prices are simply too far out of reach.

Those who decide to remain in rental units will also struggle. First, they will have less flexibility in moving around and most will be forced to stay in their current rental location. With rental vacancies expected to decrease further into 2011, rental space is expected to become sparser while at the same time more costly.

Chances of affording a home are less likely

Since the demand for rental properties is rising, the chances of owning your own home have decreased. Potential home owners are concerned about the affordability of owning a home due to higher interest rates. The Australian dream of owning your own home has taken a hit. Most people find a lot of difficulties in finding home loan information and they just leave this up. This is contributing to an increase in the demand for rental properties.

First time homebuyers are diminishing. The first time homebuyer market has been shrinking across Australia. In 2009 the first time buyer market peaked and has been falling ever since. First time home buyers now only account for about 15% of the overall housing market. The drop in first time home buyers has been a major factor in scarce rentals and rising rental prices.

For those Australians who are looking to jump into the housing market it will not be easy. The most sought out areas are high priced and compromise will most likely be in the cards for many new purchases.

Another factor contributing to high housing costs is substantial Australian economic growth. Additionally, unemployment is low. This combination is a recipe for inflated housing costs.

So The Big Questions Rent Or Buy?

Deciding between renting or buying is currently a struggle for Australians. If you are trying to decide which is best for you, you will need to sit down and weigh all the pros and cons for both scenarios. It is certainly not an easy decision to make under current housing conditions. If you want to buy and looking for home loans rates information then some good websites will help you.

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