Renting vs Buying property in 2024

The challenges in the Australian housing market have created a complex landscape for both renters and potential homebuyers in 2024. Rising property prices, reduced borrowing power, and increased deposit requirements are making the dream of homeownership seem impossible. Meanwhile, renters are grappling with an 8.3% increase in prices, posing its own set of challenges.

According to ANZ and CoreLogic’s latest Housing Affordability Report, renters are spending around 31% of their income on accommodation. On the other hand, the portion of household income required to service a new mortgage sits at around 46.2 per cent.

So what’s the answer, renting vs buying?


The realities of home ownership in 2024

Potential rate cuts in 2024 may make borrowing more affordable, but the impact on property prices remains uncertain. While lower interest rates often lead to increased property purchases, the persisting cost of living pressures may continue to impact affordability. 

While both renters and buyers face challenges, the hurdles for homebuyers are arguably higher. Homebuyers need substantial savings (typically around 20 per cent of a property’s value), along with additional funds for stamp duty and transaction costs.

Also, lenders will examine applicants’ saving and spending habits for signs that they can manage their money responsibly. They will check credit histories, ask for lists of assets and liabilities, and potentially contact employers to verify income and employment details. Even after overcoming these hurdles, homeowners face ongoing challenges such as high monthly mortgage repayments, council rates, water bills, and home insurance.

Of course, there are two big advantages that buying has over renting. Your monthly repayments may be high, but they will help build up equity in your home over time. Once your loan is eventually paid off, you’ll have a property to call your own. The other key benefit is that your home has the potential to appreciate in value which could give you more opportunities when it is time to sell.

Essentially, while the upfront and ongoing costs of purchasing property are high, there might be significant payoffs in the form of wealth and security down the track.


What does the rental market look like in 2024?

Renters, on the other hand, are experiencing some relief in 2024 as rental markets show signs of easing. The projected slowdown in overseas migration could further benefit renters, although prices are expected to stay above pre-pandemic levels due to supply-demand imbalances.

Homeownership may be a dream for many Australians, but there are plenty of reasons why someone might choose renting over buying. Renting presents an appealing alternative, especially for those prioritising flexibility and avoiding the burdens of property ownership. Renters are exempt from maintenance costs and property taxes, potentially providing a layer of financial relief.

It’s also important to remember that there is more than one way to build long-term wealth, and renters might be able to accumulate a sizable investment portfolio if they’re disciplined enough to save. 


Renting vs buying: what’s the answer?

The reality is that no one knows exactly what will happen with the property market this year and beyond. While the desire for eventual homeownership is likely to be a motivator for many Aussies, the decision to rent or buy should hinge on individual preferences, lifestyle, goals, and financial circumstances. 

If you are thinking about buying property in 2024, we recommend speaking with a Mortgage Broker to review your affordability and find the best home loan to suit your personal circumstances. 

Written by APS Manager of Home Finance, Tony Calder.

Tony has over 30 years of experience in lending and finance. His focus over the past 20 years has been in residential property lending, initially at Westpac and for the past 8 years at APS Benefits Group. Tony enjoys helping APS members and clients get the right loan to meet their specific needs and one of the advantages of working at APS is that he has access to a number of lenders. APS is a residential property lender, so if someone finds it difficult to get a loan through the banks, Tony can on most occasions fund the loan through APS, which is a great outcome for members and clients. When Tony isn’t working, he enjoys travelling, dining out with family and friends and playing golf.