Deal or no Deal?
No, not really.
Surely to enable you to sleep at night it should only ever be a decision based on your own current or foreseeable fiscal situation.
What wasn’t surprising in the report today, was that the usual suspects, Central Otago Lakes (aka Queenstown), BOP / Tauranga, etc, and Nelson were back again. (The report said it took 33.4%, 25.2%, and 26.4% respectively of a monthly income to service their quoted mortgage.)
The article also quoted the big smokes of Auckland and Wellington as places were they thought it was still better to rent than buy.
Why do I get the feeling the media seem to be treating this like its a game, take a bet one way or the other.
Its definitely not.
Speculation is still out there no doubt, but with so many players, bargains are certainly thin on the ground in the places mentioned above. And there might be other factors at play.
In all of this we only get snippets or minor comments about observations re the social or psychological effects instead of just the more obvious financial ones.
In that vein, in the article today Bob Hargreaves, the resident property expert over at Massey University in Palmerston North touches on it by saying that overseas studies indicated the stability of living in one place appeared to benefit youngsters of home owner’s more favourably than renters.
Whats he talking about?
Well in a nutshell, studies like this indicated that academically math achievement scores of owners’ children were about 9 percent higher than renters’ children, while reading achievement scores were about 7 percent higher.
Controversially back in 2003 Harkness and Newman’s study for the Journal of Housing Research demonstrated that renters’ children are 40 percent more likely to give birth as an unmarried teenager than owners’ children.
And as The Economist ( Shelter or Burden? April 16th 2009 Edition ) put it recently
Still, on balance, home ownership gives people a stake in the state of their surroundings. Thriving streets increase the value of properties, giving owners incentives to improve them further. Renters get no such benefit; they may even have to pay more if the neighbourhood improves.
And back in 1987 sociologist George Galster published this, “Homeowners and Neighborhood Reinvestment.” Amongst other things George contends that owned homes are likely to be in better physical condition, one of the reasons being its more probable that home owners will invest in the quality of their dwellings.
Another US study showed children of homeowners (US study it was) were 116 percent more likely to graduate from college (University in NZ).
So its would appear there is quite obviously a lot more to it than just rent or buy, especially in terms of family or lifestyle.
Could underlying social and family reasons be perhaps one of the reasons why certain parts of NZ are dearer to purchase a home in than other, and therefore, based on the articles assumptions, remain cheaper to rent in than to buy.
Food for thought?
A contrarian view can do great things for your comment stream?