Renting vs Owning, a quick calculation

Renting vs Owning, a quick calculation

Submitted by James Purser on Mon, 12/28/2015 - 23:13

So we rent, we always have. Not from any sort of ideological resistance to owning a house or anything, we just haven't been in the position where it's been a thing we could even consider until now.

A new job has put us into a position where we could start looking at the vague possibility of buying a house, committing to a mortgage and so on. So I've been looking around both at the houses available in the area (I like Dapto, I don't particularly want to move), and at the sort of money we would need to be paying out fortnightly.

So to give you a brief run down on what we pay a fortnight, I'll just put it at about $800. This gives us a three bedroom house with a garage, a single bathroom and toilet and a big back yard. Add in the money it costs to travel to the city to work and you could make the case we're paying around $920 a fortnight.

Average rental in Dapto in is $420, so that takes the fortnightly amount up to $960.

Now let's have a look at the buyers market. According to that site, the median house price is $430,918. The current St George 2 year fixed interest rate is 4.19%. According to their loan repayment calculator, this means that our loan repayments would be $1592 for the first two years and $1492 for the rest of the term (depending on which way interest rates go of course).

So, if we do buy a house in this area, we're looking at adding almost half again on top of what we pay at the moment.

Right. 

If we want to buy a house for close to what we're paying for rent now, we have to look at moving south to Bomaderry or Nowra, both of which have median house prices under $350,000. Unfortunately that also means that I would start travelling for six hours a day to get to work and miss 12 would have to pull out of her selective high school and so on.

We still want to buy a house, but right now it's not going to happen. So renting is going to be our thing for a while yet.

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