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Buying house 'more than twice as dear as renting'
5:00AM Tuesday July 22, 2008
By Simon Collins
Buying a house is now almost two and a half times as expensive as renting, according to figures to be presented at a seminar today.
Property Investors Federation vice-president Andrew King says a 25-year mortgage for 90 per cent of the cost of the country's median-priced house, worth $345,000 last month, would currently cost a new home-buyer $745 a week, including rates, maintenance, insurance and an allowance for other costs.
By contrast, the national median rent last month was only $305 a week.
He will tell an Australasian Housing Institute seminar on affordable rental housing in Waitakere today that the ratio of mortgage costs to rents is higher in New Zealand than in five similar countries.
"Right now the gap is enormous, but it's always been there because New Zealanders prefer to own their own property rather than rent, so they are always willing to pay a premium rather than renting," he said yesterday.
"At the moment a first-home buyer could save more than $20,000 a year and rent for, say, three to five years, then they'll have $60,000 to $100,000 extra to put towards a deposit.
"They can probably also take advantage of KiwiSaver, so there is a real incentive at the moment to rent."
Like many pundits, Mr King predicts that average rents will rise as people realise that they are better off renting.
But a Crockers Real Estate analysis of tenancy bonds lodged with the Department of Building and Housing suggests that rents are rising only slightly, particularly in Auckland where they were already well above the national average.
The average rent for a three-bedroom house in Auckland rose by 3.8 per cent from $420 a week in July last year to $436 last month, roughly in line with the general inflation rate of 4 per cent. Nationally, the three-bedroom average rose slightly faster, from $320 to $340, or 6.25 per cent. The average jumped by 8.3 per cent in Wellington, but actually fell by 6.7 per cent in Christchurch.
Crockers marketing manager Karen Coleman said it was hard to generalise about whether it was better to rent or buy because everyone's situation was different. "If someone was totally cashed up, why rent? But if you are going to borrow ... "
5:00AM Tuesday July 22, 2008
By Simon Collins
Buying a house is now almost two and a half times as expensive as renting, according to figures to be presented at a seminar today.
Property Investors Federation vice-president Andrew King says a 25-year mortgage for 90 per cent of the cost of the country's median-priced house, worth $345,000 last month, would currently cost a new home-buyer $745 a week, including rates, maintenance, insurance and an allowance for other costs.
By contrast, the national median rent last month was only $305 a week.
He will tell an Australasian Housing Institute seminar on affordable rental housing in Waitakere today that the ratio of mortgage costs to rents is higher in New Zealand than in five similar countries.
"Right now the gap is enormous, but it's always been there because New Zealanders prefer to own their own property rather than rent, so they are always willing to pay a premium rather than renting," he said yesterday.
"At the moment a first-home buyer could save more than $20,000 a year and rent for, say, three to five years, then they'll have $60,000 to $100,000 extra to put towards a deposit.
"They can probably also take advantage of KiwiSaver, so there is a real incentive at the moment to rent."
Like many pundits, Mr King predicts that average rents will rise as people realise that they are better off renting.
But a Crockers Real Estate analysis of tenancy bonds lodged with the Department of Building and Housing suggests that rents are rising only slightly, particularly in Auckland where they were already well above the national average.
The average rent for a three-bedroom house in Auckland rose by 3.8 per cent from $420 a week in July last year to $436 last month, roughly in line with the general inflation rate of 4 per cent. Nationally, the three-bedroom average rose slightly faster, from $320 to $340, or 6.25 per cent. The average jumped by 8.3 per cent in Wellington, but actually fell by 6.7 per cent in Christchurch.
Crockers marketing manager Karen Coleman said it was hard to generalise about whether it was better to rent or buy because everyone's situation was different. "If someone was totally cashed up, why rent? But if you are going to borrow ... "
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