wolvesaussie Posted February 12, 2013 Share Posted February 12, 2013 Hi, up doing some research into housing on realestate.com.au. How is it that rent is so much cheaper than buying? Are there lots of you just renting and never planning on buying. Looking at Established suburbs in Melbourne about 20mins drive from the city, I can rent a 3 bedroom for $400 a week. To buy a simular house in the same area, using the mortgague calculator provided down the bottom of the page, its saying it would cost nearly $3000 a month to service the required $400,000 + loan. Its over $1000 cheaper a month to rent and thats before you factor in stamp duty/council tax/rates etc. It would seem its far more sensible to buy something in the UK, rent it out (at a profit), then rent forever in Australia while the UK house pays itself off.. Rents dont seem to adjust that much either, I can move to a beachside suburb and rents are only a tad more, yet the houses go up to 500,000 and an even more expensive repayment plan. Link to comment Share on other sites More sharing options...
Guest Guest26012 Posted February 12, 2013 Share Posted February 12, 2013 I don't know that the rents are cheaper than buying in Perth at the mo? High rents and low availability lol! Link to comment Share on other sites More sharing options...
Petals Posted February 12, 2013 Share Posted February 12, 2013 The house you rent for $400 will be a very basic, probably old house, not updated and probably no heating and cooling. You would get a decent apartment for that amount but not a house. The houses are very expensive because of the land value living close into the city. Also these suburbs are highly desirable so hold their price. Lot of competition for good houses in inner Melbourne. Also tenure, most people want to buy a house for the tenure, they can stay there, whereas when its a rental, they can take back the house at the end of the rental term if a family member wants to live in the property. Also they may sell the property and the new owners will want to live in the property therefore when the lease is up the tenants have to find somewhere new to live. This is very upsetting if children and change of schools is involved. So we suck it up and buy. Link to comment Share on other sites More sharing options...
wolvesaussie Posted February 12, 2013 Author Share Posted February 12, 2013 Thats cause your all rich miners Link to comment Share on other sites More sharing options...
Rupert Posted February 12, 2013 Share Posted February 12, 2013 I don't think it is true. It would cost me about the same to service an 80% mortgage on a 3 bed house that suits my needs as it would to pay rent on a 3 bed house that suits my needs. Once I have the deposit I will buy. Link to comment Share on other sites More sharing options...
Guest Guest26012 Posted February 12, 2013 Share Posted February 12, 2013 Thats cause your all rich miners I wish lol! Link to comment Share on other sites More sharing options...
wolvesaussie Posted February 12, 2013 Author Share Posted February 12, 2013 Maybe if you have a big deposit it changes the figures but it honestly seems to work out like that if you need to lend a large sum, could do with finding someone who has the house For Sale/Rent then can get a true comparison. Link to comment Share on other sites More sharing options...
wolvesaussie Posted February 12, 2013 Author Share Posted February 12, 2013 80% means finding $100,000, thats a lot of money to save Link to comment Share on other sites More sharing options...
Rupert Posted February 12, 2013 Share Posted February 12, 2013 80% means finding $100,000, thats a lot of money to save I wish. Try $200k, I live in Sydney, not many houses to be had for $500k. Link to comment Share on other sites More sharing options...
calNgary Posted February 12, 2013 Share Posted February 12, 2013 I found a lot more people here rent than own their own home compared to people in the UK so its probably just a bigger market here. Prices do vary lots from state to state and suburb to suburb though. Cal x Link to comment Share on other sites More sharing options...
Guest JK2510 Posted February 12, 2013 Share Posted February 12, 2013 Still cheaper to rent then buy in Perth if you only have a 5-10% deposit. Not everyone has been able to bring a large chunk over from UK. Link to comment Share on other sites More sharing options...
dmjg Posted February 12, 2013 Share Posted February 12, 2013 Landlords can declare all interest paid on rental loans in their tax return. Lots buy to rent as a tax break as even making a loss on the property can lower their tax bracket, they pay less tax, and come out ahead at the end of the year. Do that for 25 years and you have a free house! :wink: But if you sell it you have to pay CGT. That's why we have accountants to do our tax returns:wacko: Link to comment Share on other sites More sharing options...
wolvesaussie Posted February 12, 2013 Author Share Posted February 12, 2013 Can I do that on my UK house as well if I pay tax on it in Australia? Link to comment Share on other sites More sharing options...
Guest Posted February 12, 2013 Share Posted February 12, 2013 Renting on a month by month basis is cheaper as you dont pay council rates and the rent for the same house will be cheaper than the morgage. However the amount extra when you bought will get cheaper in real terms after a few years. Also money spen on renting isnt going towards anything and the money you spend on rent in the long term would eventually yeild you owning a house. Rent will only ever go up! It is however I think a good idea to rent for a year or so as the massive expense would kill you in the first year or two on top of migrating. rent initially and try and enjoy, if you still like it when the honeymoon period has worn off then buy Link to comment Share on other sites More sharing options...
surfndirt Posted February 12, 2013 Share Posted February 12, 2013 You have hit the nail well and truly square on the head. Buy a decent place in the UK in a good area that will be positively geared. POSITIVE GEARING is the only way to invest in property for gain. Don't listen to anyone that tells you otherwise. I'm sure people will start banging on about negative gearing etc etc. It's the biggest con ever. An investment that is cash flow positive is an investment, a purchase where you loose money every month in the notion that Gillard will give you 30c in the dollar back is not.... Find a cash flow positive purchase here in Oz fine - same thing. Only problem is you won't..... It's a tax trickery con invented a few decades ago to move the cost of social housing from the govt purse to the private purse i.e. little landlords playing property mogul - running around like headless chooks when Gillard gives them a tiny bit of tax back. What areas were you looking at in Melbourne - I will give you the honest low-down on those too! Link to comment Share on other sites More sharing options...
Parley Posted February 12, 2013 Share Posted February 12, 2013 Positive gearing properties are easier to find in regional areas of Australia where the properties are a lot cheaper. I agree I wouldn't look at negative gearing at the moment. It requires you to make a large capital gain eventually when you sell to make up for the yearly losses and it is unlikely at the moment. Mind you in the glory days people were making a fortune negative gearing, buy places off the plan with no stamp duty and the house would go up in value quickly, and use the equity to fund the next purchase. Link to comment Share on other sites More sharing options...
ali Posted February 12, 2013 Share Posted February 12, 2013 I don't know that the rents are cheaper than buying in Perth at the mo? High rents and low availability lol! My friends rent has been increased about 3 times in 2 years, plus the inconvenience of an inspection every 12 weeks and they seem to nit pick - her house is spotless - they complained about the grass at the front (anyone will know with the heat wave it's hard to keep it looing green and lush) and she's missed one extractor fan which had a bit (and I mean a bit) of dust. She can't wait for her build to be ready. Link to comment Share on other sites More sharing options...
Paul1Perth Posted February 12, 2013 Share Posted February 12, 2013 I think it's a good idea to rent when you first get here. Gives you a chance to look around and find a suburb that suits what you are looking for. No need to rush into anything, you might make a very expensive mistake. Link to comment Share on other sites More sharing options...
Eera Posted February 12, 2013 Share Posted February 12, 2013 I don't know where the myth that you make money negative gearing comes from; if you can back 30c in the dollar you're still losing 70c. You can reclaim a decent amount through depreciation which often makes the difference between negative and positive cashflow properties. As my father in law puts it; if you're claiming tax back, you're losing money, if you're being taxed, you're making it. As for why rent is cheap? I don't think it is really, it's simply what the market price is for that sort of property, even when the market is tight if you over-price yourself you won't get a tenant. Link to comment Share on other sites More sharing options...
Parley Posted February 12, 2013 Share Posted February 12, 2013 I don't know where the myth that you make money negative gearing comes from; if you can back 30c in the dollar you're still losing 70c. You can reclaim a decent amount through depreciation which often makes the difference between negative and positive cashflow properties. As my father in law puts it; if you're claiming tax back, you're losing money, if you're being taxed, you're making it. As for why rent is cheap? I don't think it is really, it's simply what the market price is for that sort of property, even when the market is tight if you over-price yourself you won't get a tenant. Its not a myth, the idea is you make a capital gain on an appreciating asset. It is only worthwhile if you end up selling the asset for a big enough gain to make up for the annual losses. Not sure if you know but it is not restricted to houses. You can similarly negatively gear against a portfolio of shares. If they go up in value more than your interest payments it is worthwhile. Link to comment Share on other sites More sharing options...
Petals Posted February 12, 2013 Share Posted February 12, 2013 Negative gearing pay the Bank or pay the tax, no sure capital gain. Its a gamble and like the share market should be done with money that is not needed for other things. Seen a lot of people get their fingers burnt due to the fact they have not got a crystal ball for the future. Link to comment Share on other sites More sharing options...
Guest Posted February 12, 2013 Share Posted February 12, 2013 Can I do that on my UK house as well if I pay tax on it in Australia? Abdolutely you can if you are PR, more complex if 457 (& I'd definitely use an accountant in that case) but I offset all the interest payments on my UK house against the tax paid here and got a nice big refund. Link to comment Share on other sites More sharing options...
Guest chris955 Posted February 12, 2013 Share Posted February 12, 2013 I found a lot more people here rent than own their own home compared to people in the UK so its probably just a bigger market here. Prices do vary lots from state to state and suburb to suburb though. Cal x I always imagined home ownership was higher in Australia, the whole Aussie dream thing but actually the rate is almost the same in both countries, 70 odd %. Link to comment Share on other sites More sharing options...
Peach Posted February 12, 2013 Share Posted February 12, 2013 As my father in law puts it; if you're claiming tax back, you're losing money, if you're being taxed, you're making it. But this just isn't true. A tradesman that doesn't claim back (i.e. make a tax deduction) for the cost of his vehicle or tools is missing out on money - regardless of his income. Link to comment Share on other sites More sharing options...
keily Posted February 12, 2013 Share Posted February 12, 2013 our last rental property went up to $520/week when we vacated (from $480) ...our mortgage is $620 .... so wouldnt say it was that much cheaper !! mrs keily Link to comment Share on other sites More sharing options...
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