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I have been renting for a long time and I have finally saved enough money to put a deposit for an apartment in Sydney, Australia (houses are out of my price ran

I have been renting for a long time and I have finally saved enough money to put a deposit for an apartment in Sydney, Australia (houses are out of my price range). I ran through several simulations to try project my financial position in 5 and 10 years if I buy when compared to renting and investing in a fund. I came to the baffling conclusion that ownership is not worth it. That said, one of the permutations I ran was using an interest only loan to essentially rent an apartment but from the bank rather than a landlord. This strategy would actually have been more cost effective than renting if it weren't for the additional fees associated with selling. I am surprised there isn't a bank product designed to disrupt the owner-renter model and offer people to buy a property and pay the lower interest rate rather than the inflated rental price sold by owners.

jlokier 5y ago
> I came to the baffling conclusion that ownership is not worth it. I came to that conclusion about 20 years ago. So I decided, rationally, to stick with renting and saving, and I'd wait until prices dropped a bit. Well prices didn't drop in that 20 years, and my savings ended up covering some costs. I didn't end up better off. In retrospect, despite the (small) price differential in favour of renting and saving at that tim, I think not buying when I could have was a strategic mistake. I would say this: If something turns up in your life that needs you to pay unless you can get means-tested support, it's less likely to force you to sell the house than it is to force you to spend your savings, even if they are in a fund. Also, investments can go down as well as up. This is true for investment funds and housing (in theory). But if there's a market crash, you still have a house when that happens. If it's in a fund, you lost it. In other words, there's greater exposure to risk via the fund because long term volatility affects the fund value to you, but you are relatively insulated to changes in the value of housing, especially if everyone else is affected the same way.

jlokier 5y ago

> I came to the baffling conclusion that ownership is not worth it. I came to that conclusion about 20 years ago. So I decided, rationally, to stick with renting and saving, and I'd wait until prices dropped a bit. Well prices didn't drop in that 20 years, and my savings ended up covering some costs. I didn't end up better off. In retrospect, despite the (small) price differential in favour of renting and saving at that tim, I think not buying when I could have was a strategic mistake. I would say this: If something turns up in your life that needs you to pay unless you can get means-tested support, it's less likely to force you to sell the house than it is to force you to spend your savings, even if they are in a fund. Also, investments can go down as well as up. This is true for investment funds and housing (in theory). But if there's a market crash, you still have a house when that happens. If it's in a fund, you lost it. In other words, there's greater exposure to risk via the fund because long term volatility affects the fund value to you, but you are relatively insulated to changes in the value of housing, especially if everyone else is affected the same way.