Should you rent or own in the current climate?

Should you rent or own in the current climate?

Much has been made of the global housing crash, and rightly so. It wiped thousands off the value of people’s properties and left many unable to afford to pay mortgages for properties that were no longer worth the value of their home loans. Repossessions soared as people lost their jobs as the housing crashed triggered a global recession, and for a number of years people wondered if the property market could ever recover.

Now though, all of the signs seem to be pointing to a property market which is not only starting to find its feet but is steadying itself upon them too. Demand for houses is outstripping supply due to the fact that the construction industry stopped constructing new houses because the demand simply was not there, and the effect of this is helping to push property prices back up.

As more people left their homes, either due to not being able to afford the mortgages or because they had them reposed, more people turned to renting as a short-term solution. The effect of this was that the inventory of available properties to rent fell and rents rose. In short, the very things that led people to not be able to afford to stay in their own homes meant that they were now being priced out of the rental market as well.

Many people chose to move back in with their parents if this was an option; however, as the economy starts its slow road to recovery and more jobs become available, people are wondering if it is now time to move back out on their own?

Finding a property to buy should be relatively easy, as many banks still have numbers of distressed properties they are looking to shift and construction companies are about to embark on new developments to meet the rising demand. With interest rates still at an all-time low, repayments should be easier to meet than they have been for some time; however, many banks are still wary of lending and getting a mortgage might be a problem if your credit history is not perfect.

On the other side, rents are quite high in many cities but rented accommodation offers the opportunity to live in your own place without the need to sign up for a mortgage.

It is perhaps one of the stranger effects of the global housing market that at present there are an equal number of pros and cons for both buying and renting in today’s market.  There is no doubt that the market is steadying, but the unavailability of easy credit means that getting back on that property ladder might be tricky.

In the end, it all comes down to personal preference and your credit history.  Rents might be high and mortgage repayments low, so the decisive factor could be you and what kind of commitment you are prepared to make.

Lance Grooms