he Kiwi dream has always included owning your own place, your Turangawaewae, the good old 1/4 acre paradise. But if you take a bare ‘money in vs money out’ approach, renting almost always comes out the better option.

Surely its not all about cost though? If it was then as Olly Newland said in a recent article it would imply “…that an even more efficient way to obtain shelter is to live in a cave, rub sticks for fire and dress in rags!” Indeed. Like, you’re gonna do that!

Personally, I like ownership and encourage people to aim for it.

Some would say that you should put your inflation goggles on when comparing renting and owning and there are two angles to this. Firstly, house prices and incomes tend to increase with inflation so the net cost of owning property might be lower than you first thought and as your income goes up owning gets easier over time. The second angle is that inflation is also a trigger for rent increases so over the long term renting actually costs you more.

But renting is good in that there are no maintenance costs, no insurance, no rates and you can ignore the fuss every time the Reserve Bank makes a noise. Leaky tap? Ring the landlord. Since you’re not forking out for those things there is often more money for fun, maybe a bit of travel etc

The trouble with renting is that

– you pay forever but have nothing tangible to show for it

– you can be booted out at short notice

– rents only go one way, up!

– and any improvements you make to the property ultimately benefit the landlord, not you.

Having said that, property ownership does require you to be in a certain ’headspace’ and in our experience most successful first home buyers are in a settled kind of lifestyle. And those looking to upgrade to house number two (or three) have been settled for a while.

Its likely that both groups have started or developed a career or steady business, haven’t changed address too many times recently and are often in a relationship of some sort. Yeah that’s generalising I know but it makes sense cos if you’re in that headspace you’ll be more likely to have the income required to pay the mortgage you’ll undoubtedly need.

The power of two incomes means you’ll also have a fair chance of being able to save the deposit in reasonable time as well!

If that sounds like you, chances are you’re sick of being a tenant or flatmate too.

In the end, it comes down your personal aspirations and has less to do with the numbers than you might think. So, take my advice – don’t make the mistake of using an accounting comparison to answer the rent vs buying question lest it turn you into some kind of economic robot. Is there not room for pride? For a secure place to raise a family? For capital gain (or at least a chance at it)? For an escape from your dodgy flatmates?


About Campbell Hastie

Cam is one half of Auckland based mortgage brokers, The Go 2 Guys.

He makes a living by sharing what he knows about mortgages with people, arranging mortgages for people and then insuring people.

He doesn't claim to know everything about mortgages himself which is why he teamed up with David Mercer — hence the ‘2’ in Go 2 Guys.

He writes posts regularly on his blog and has been told he has an ability to share his knowledge in a simple and sometimes memorable way.

Feel free to comment and ask any questions. Contact Campbell Hastie m: 027 697 7789.

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