Article in The West Australian today about renting vs buying.
The numbers they used were fairly realistic for perth.
Buying:
550k house with 500k loan
Weekly repayments of 752 (avg interest rate 7%) plus 5k a year in associated costs and bills
Total after 30 yrs is 3.35mil house paid off. (Using avg growth of 6%)
Renting:
500 per week rent, invest remaining 348 a week into shares (avg income of 55k)
30 years later with shares compounding at 8% pa gives $2.1M
Result 1mil better off buying. Itd prob be a fairer result if the shares example included dividends. Or was IP instead.
But, if we live in an environment whereby renting isnt significantly better, then surely houses arent unaffordable or overpriced.
Thoughts?
The numbers they used were fairly realistic for perth.
Buying:
550k house with 500k loan
Weekly repayments of 752 (avg interest rate 7%) plus 5k a year in associated costs and bills
Total after 30 yrs is 3.35mil house paid off. (Using avg growth of 6%)
Renting:
500 per week rent, invest remaining 348 a week into shares (avg income of 55k)
30 years later with shares compounding at 8% pa gives $2.1M
Result 1mil better off buying. Itd prob be a fairer result if the shares example included dividends. Or was IP instead.
But, if we live in an environment whereby renting isnt significantly better, then surely houses arent unaffordable or overpriced.
Thoughts?