A financial expert has criticised an Australian who expressed reluctance to commit to a mortgage, arguing that renting is a much worse financial option.
“Fuck the mortgage, fuck being tied to a mortgage,” the 37-year-old said during a street interview posted on social media this week.
The man explained that he had about $60,000 invested but had no intention of taking out a mortgage.
“I’m going to make a lot more in the money markets and then I’m going to buy one outright,” he said.
Despite her comments about not wanting to take out a mortgage, she explained that her rent had skyrocketed and was triggered by the rising cost of property in Australia.
‘My rent alone has gone up $100 a week in the last year and a half,’ she explained.
‘It’s a completely avoidable problem and, frankly, it’s a problem that is a direct consequence of the commodification of housing.
‘Turning housing into an asset class is the direct cause of this problem.
Mortgage broker Robert Roper has criticised an Australian man (pictured) for saying he did not want to be tied down by paying a mortgage.
But financial expert Rob Roper has called out the man, arguing that having a mortgage is better than paying rent, which ultimately helps pay someone else’s mortgage.
“But the alternative is paying someone else’s mortgage,” Roper said.
‘If you pay $700 a week in rent, that means you’re paying $36,400 a year on your landlord’s mortgage.
‘If you pay your own mortgage, you will eventually own the house, so you won’t be stuck in a situation like so many older people who are forced to pay current rental prices without an income.’
Mr Roper explained that Australians can get a home loan with just a 2 per cent deposit.
For first-time homebuyers, this can be combined with their state’s stamp duty exemption, allowing them to avoid around $30,000 in property taxes, he explained.
“So with about $32,000 in the bank you could buy a $600,000 house, townhouse, unit or apartment for less than you probably spend on rent per year,” Roper said.
His comments come at a time when rents remain high and inventory is low.
National rents were unchanged for the June 2024 quarter at $600 per week, but this marks an increase of 9.1 per cent, or $50 more, from the same period last year, according to REA Group’s PropTrack Rental Report for June.
New rental listings on Realestate.com.au were 4.7 per cent lower in June compared with a year earlier, the lowest June level since 2010.
While total listings rose more than 10 percent in the June quarter, conditions remained tight with total inventories down 4.4 percent year-over-year.
Mr Roper (pictured), who is the director of Trusted Finances, said having a mortgage was better than renting. He said renting was paying off someone else’s loan and the amount of money spent annually on rent could sometimes be more than the mortgage loan repayments.
Tough rental conditions appear to be encouraging renters with cash to buy their own homes, said Cameron Kusher, director of economic research at PropTrack.
Loans to first-time home buyers in the year to May rose 6.2 percent, while loans to investors grew 7.9 percent.
“Rising lending activity for first-time homebuyers has seen renters with the means exit the market to buy, while increased lending to investors will likely also alleviate some rental pressures,” Kusher said.
Sydney fared worse during the June quarter as renters faced the lowest supply of available properties for the month in more than a decade, with new rental listings down 2.8 per cent and total rents falling 4.8 per cent.
Despite recording a rise in vacancy rates to 1.7 percent, average listed rents in the port city rose $60 to outpace the country at $740 per week.
The situation was not much better for regional renters in New South Wales, where housing offers shrank by 19 per cent over the year, resulting in tougher competition among prospective tenants.
Rental supply in Melbourne remained tight in June, with 16.8 per cent fewer new properties coming to market over the year, but total listings remaining relatively stagnant.
The rental vacancy rate rose 0.34 percent during the quarter to hit a 12-month high of 1.5 percent, but that also signaled a rise in median rents to $575 a week, up $55 from a year ago.
While rents in regional Victoria adjusted and new and total listings declined, prices remained unchanged at $450 per week.
Brisbane renters faced a more optimistic outlook as market conditions improved during the June quarter, bringing with them increasing supply and rental listings while competition eased.
Vacancy rates rose to 1.2 per cent during the quarter and median rents for both Brisbane and regional Queensland stood at $620 per week.
Adelaide and Perth saw an increase in rental supply and also increases in their asking rents as conditions eased in both markets.
The median rent in Adelaide in the June quarter rose to $570, while Perth had a median advertised rent of $650.
Asking rental prices in the nation’s capital remained stagnant at $600 during the year through June, despite tighter supply and rising demand.
While rental growth continues to slow, Mr. Kusher anticipates that it will continue to outpace the rate of inflation as prices are unlikely to stabilize in the short to medium term.
“The weakening rental growth likely reflects the sacrifices renters are making due to the higher cost of rent and living,” he said.
‘Some of these trade-offs may include renting smaller properties, renting in less desirable locations where rental costs are cheaper, or sharing rental accommodation with other tenants.’
Research showed renters were choosing to buy a home rather than face rising rental prices and low housing stock in Australia’s tough rental market (pictured, Australians queuing at an open house for a rental property)