Friday, January 25, 2013

Cheaper to buy than rent

There was a story in the AFR yesterday (page 7) with the headline "Cheaper to buy than rent". However, take care with such stories. First, it is based on a report by a mortgage broker, that wants to encourage people to buy and take out loans. Second, it uses average loan sizes and average rents, and so does not compare apples with apples. Third, it does not take into account rates, water fees, body corporate, stamp duty, maintenance or insurance. The article says that it is $800 a year cheaper to buy in Brisbane, but once these additional costs taken into account, it is clearly cheaper to rent than buy even on these misleading figures.

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