A financial expert has criticised an Australian who spoke out about his reluctance to take out a mortgage, saying renting is a much worse financial option.
“F**k mortgage, f**k being stuck with a mortgage,” the 37-year-old man said during a street interview posted on social media this week.
The man explained that he had invested about $60,000, but that he had no intention of taking out a mortgage.
“I’m going to make a lot more money on the money market, and then I’m going to buy one right away,” he said.
Despite his comments that he didn’t want a mortgage, he explained that his rent had increased dramatically and that this was due to rising house prices in Australia.
“My rent alone has gone up $100 a week in the last year and a half,” he explains.
“It’s a completely preventable problem. And frankly, it’s a direct result of the commercialization of housing.
‘By making housing an investment category, this problem is directly caused.
Mortgage broker Robert Roper approached an Australian man (pictured) after he claimed he didn’t want to be tied down to paying a mortgage
However, financial expert Rob Roper confronted the man and argued that a mortgage is better than paying rent because it ultimately allows you to pay off someone else’s mortgage.
“But the alternative is to pay someone else’s mortgage,” Mr. Roper said, addressing the man.
“If you pay $700 a week in rent, that means you’re paying off $36,400 a year in mortgage payments to your landlord.
‘If you pay your own mortgage, you will eventually own the house. You will not be in the situation that so many elderly people are in now, who are forced to pay today’s rents without an income.’
Mr Roper explained that Australians can get a mortgage with a deposit of as little as 2 per cent.
For first-time home buyers, this could be combined with their state’s stamp duty exemption, allowing them to avoid about $30,000 in property taxes, he said.
“With about $32,000 in the bank, you could buy a $600,000 house, townhouse, apartment or condo for less than the rent you’re likely to pay each year.”
His comments come as rents across Australia remain high and share prices low.
According to REA Group’s June PropTrack Rental Report, national rental rates remained unchanged at $600 per week for the June 2024 quarter. However, this represents a 9.1 percent increase, or $50 more, compared to the same period last year.
The number of new rental properties listed on Realestate.com.au was down 4.7 percent in June compared to a year earlier, the lowest level in June since 2010.
While total listings rose more than 10 percent in the second quarter, conditions remained tight, with total inventory down 4.4 percent year-over-year.
Mr Roper (pictured, Managing Director of Trusted Finances) said that a mortgage is better than renting. He said that renting is paying off someone else’s loan and that the amount spent on rent each year can sometimes be more than the mortgage repayment.
According to Cameron Kusher, director of economic research at PropTrack, the strict rental requirements appear to encourage wealthy renters to buy their own homes.
Loans to first-home buyers rose 6.2 percent in the year to May, while loans to investors rose 7.9 percent.
“Increased lending to first-home buyers has resulted in renters with the means to exit the market to purchase a home. At the same time, increased lending to investors is also likely to ease rent pressure,” Kusher said.
Sydney performed worst in the second quarter as renters faced the lowest supply of available homes in more than a decade. The number of new rental properties fell by 2.8 percent and total rents fell by 4.8 percent.
Despite a rise in the vacancy rate to 1.7 percent, median advertised rents in the port city rose by $60 to the highest level in the country at $740 per week.
Things weren’t much better for regional renters in New South Wales, with the number of properties available to rent falling by 19 per cent over the year, resulting in fiercer competition between potential tenants.
The supply of rental properties in Melbourne remained tight in June, as new listings fell by 16.8 percent over the year, but overall supply remained broadly flat.
The rental vacancy rate rose by 0.34 per cent in the quarter, reaching a 12-month high of 1.5 per cent. However, this also meant that median rents rose to $575 per week, up $55 on a year earlier.
While rental prices in regional Victoria fell and the number of new and total listings decreased, prices remained unchanged at $450 per week.
Renters in Brisbane were given a brighter outlook as market conditions improved in the second quarter, increasing the supply and number of rental properties while reducing competition.
The vacancy rate rose to 1.2 per cent in the quarter and median rents for both Brisbane and regional Queensland were $620 per week.
Adelaide and Perth saw rental supply increase and rents also rose as conditions in both markets eased.
The average rent for Adelaide rose to $570 in the second quarter, while the advertised average rent for Perth was $650.
Rents in the capital remained flat at $600 in the year to June despite tighter supply and growing demand.
Although rental growth continues to slow, Kusher expects it to outpace inflation, as prices are unlikely to stabilize in the short to medium term.
“The slowing rent growth likely reflects tenants’ trade-offs due to increased rent and living costs,” he said.
‘Some of these trade-offs may include renting smaller properties, renting in less attractive locations where rental costs are lower, or sharing rental properties with other tenants.’
Research shows that renters are choosing to buy a home rather than face rising rents and low housing supply in Australia’s tight rental market (pictured are Australians queuing up for an open house for a rental property)