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To buy or not to buy? That is the question

Eclipse

You may have been considering property investment in the Whitsunday Shire or taking out your first home loan in the region. It's a substantial step, and those who currently rent will be weighing up their options.

Many consider renting to be cheaper than buying, although it comes at the price of never owning your own home. However, with housing affordability across Australia sitting at a comfortable position, is that still so?

What is cheaper, renting or a mortgage?

New research from the Australian Bureau of Statistics (ABS) shows that the cost of owning a home has stayed steady over the 2011-12 and 2013-14 periods at $453 a week. Meanwhile, rental increases have pushed up the price of not owning your own home, although it's still lower at $340 per week.

As Caroline Daley from the ABS suggested, the unchanged home costs are making it more economical to own, and have made going to see your Whitsunday Shire mortgage broker a more attractive proposition.

"With housing costs for owners with a mortgage remaining steady, and gross weekly income increasing, mortgages, on average, became more affordable in 2013-14," she explained.

Are you ready to see your mortgage broker in the Whitsunday Shire?Are you ready to see your mortgage broker in the Whitsunday Shire?

The increase in housing costs has lead renters to now pay an average 20 per cent of their wage to their landlords.

Owner-occupiers paying proportionally less

It's important to keep in mind that affordability does not come from a lower cost, but how much of an owner or renter's wage goes into their mortgage payments. The ABS found this trend to have also fallen in favour of those seeking a home loan.

The static home costs for an owner-occupier coupled with rising wages mean the average amount they have to dedicate to their mortgage has fallen 2 percentage points – from 18 per cent of income in 2011-12 to 16 per cent in the most recent findings.

Lower-income households paid more, with 27 per cent of gross weekly income going towards paying the mortgage.

Compare this to rental costs, and we see quite the difference. The increase in housing costs has lead renters to now pay an average 20 per cent of their wage to their landlords. In low-income rental property, this is as high as 34 per cent.

Is it time to buy?

Those considering their first home loan will be summoning the words of William Shakespeare's Hamlet -"to buy or not to buy?" The statistics show that it could mean more money in your pocket if your financial situation suits the prospect of buying your first house – and you'll have a tangible asset at the end of it.

However, it's important to seek mortgage advice before answering that 16th century conundrum. If you wish to speak to a mortgage broker, the team here at Eclipse Financial Services is here to help.