I would like some advice on selling in current Perth market at the moment.
My wife & I own a house in Cannington worth $500K. We have moved to another suburb for kids’ school and renting at the moment, paying $500/wk. house we own is rented out now at $400 net.
We would like to buy a house in the suburb we are currently renting in by end of this year.
So my question is should we keep renting or buy? given the current market is so dull.
In regards to buying another house im not sure how much we can borrow but we earn $115K & $110K annually.
I don’t know if this is enough information but if this isn’t enough then please ask.BennyModerator@bennyJoin Date: 2002Post Count: 1,325
I can’t make any comment on the Perth market as I live on the East side of Australia. However, it is good you are asking before “doing” as there are a number of things you should check out before you make your next move.
First off, there are Tax benefits in selling your first home before buying another (and it might mean you can offer cash for your next home, thus allowing bargaining of a lower price perhaps). On the flip side though, there are also Tax benefits in providing rental accommodation for others by keeping your current home as a rental and buying another. Your income appears to be sufficient to be able to buy a further property (and not sell your first home), depending on your current expenses of course. A Mortgage Broker could help you more on that though, as the lending climate has changed markedly since the Royal Commission into Financial Institutions.
Further to this are other thoughts – like, are property values in Perth likely to appreciate in the medium- to long-term? If so, would you want to hold two properties instead of one over that time, thus building up your Equity? The risk there is that values might stay low, and keep your finances locked into two assets that aren’t growing. Also, it could be your money might be better used elsewhere. Is your spare cashflow sufficient to cover all costs during that period? Then again, if you sell now and buy again soon, the Equity you have in your current home is then “all yours” with no Tax payable, allowing you to buy another in the same climate, thus not losing out on any growth that might occur in future markets. But if there is growth, holding two would be better than one, yes?
Whew !! Sounds like a circular argument, eh? ;)
Sorry SBH – it sounds like I am asking more questions than I am answering, but that is purely to start you thinking around the whole subject, rather than just concentrating on “do I sell this or not”? There are many good reasons why you should and/or shouldn’t. Becoming more aware of ALL your available options is a good option at this time.
BennyJason StaggersParticipant@jason_staggersJoin Date: 2006Post Count: 59
Hi SBH. The question of whether to buy a PPR is not as objective as making an investment decision because there are personal and lifestyle motivations (not just financial goals) driving the decision. Here are a few questions to consider…
– Is it more expensive to own than rent in the area?
– If so, will buying a home restrict your progress toward your investing goals? Will buying a home lead to cash flow pressure that would restrict lifestyle in other areas?
– Are family/lifestyle motivations stronger than financial motivations? If so, and you can comfortably absorb the costs of owning, then the financial concerns are secondary.
– How long would you own this home? The longer you intend to own, the less the current state of the Perth market matters in the decision.
Hope those questions can set you on the right path.
Thank you very much for your reply Benny & Jason
I think I was looking for a simple advise whether I should buy in where I want to live or not. rents probably cheaper like $500-600 for a standard house and owning a house costs a bit more for sure. Is there a benefit in the long run to own a house in this area? or should I just rent and invest somewhere else.TerrywParticipant@terrywJoin Date: 2001Post Count: 16,110
Do you think values where you are renting will increase in the near future?
renting is probably cheaper than owning so no point in buying unless you think values will grow faster than what if costs you to rent (renting – home costs)
At the moment I feel i’m throwing $500 a week away.
Is there a renting minus home costs matrix somebody can explain.BennyModerator@bennyJoin Date: 2002Post Count: 1,325
Re the “Rentvesting”, you might want to use the Search feature (click on Forums, then “Search”). One result I found from doing that led to this topic:-
That might prove useful to you.
You also ask this:-
Is there a benefit in the long run to own a house in this area?
… but you don’t mention what area you are renting in (even though I can’t help you with Melbourne areas, others might – but they would need a suburb name).
Hope that helps somewhat,
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