Why owning a house may not be such a great thing

ARE you one of thousands complaining about expensive housing prices? It turns out buying a house may not be the best decision.

Wilson Realestate agent Martin Fox sells designer Jenny Bannister and Husband Mongooses St Kilda House for over 3 million. For Sunday Herald Sun real estate section: fashion designer Jenny Bannister is selling her award-winning St Kilda home at auction on Saturday. Picture: Jason Edwards

YOU often hear people talking about how they’ve had to kiss goodbye their dream of owning a home because it was just too expensive.

Out of the lucky people who do own properties, some have had to save furiously for years while others have found themselves buried in huge debts they’ll probably never pay off.

So why are we so obsessed with owning a home?

You often hear the term “dead money” when talking about renting but University of Sydney property law lecturer John Eldridge believes renting is the best way to get ahead and being fixated on securing a property could actually be a hindrance in the long run.

Dead money is basically disappearing money, where you see no return and often people think paying rent does not contribute to your wealth. But that’s where you could be seriously mistaken.

“Think about costs involved with servicing a mortgage and running a home, a lot of that is dead money as well,” Mr Eldridge said.

“Things like interest on your mortgage, which is a large part of the payments, that’s dead money.

“You also have to deal with the little things like rates, insurance and repairs — I don’t think I’ve ever paid a rates bill in my life.”

Owning a home could cost you more “dead money” than renting. Pic Mark Calleja

Owning a home could mean sacrificing your lifestyle, according to Mr Eldridge.

He believes you can’t travel or go out as much because that costs money — money you are probably piling onto a loan or into savings for a house deposit.

Mr Eldridge, who has been renting for nine years, goes to bed with peace of mind every night, knowing whatever goes wrong in the house is not really his headache.

“There’s a lot of stress that comes with having a mortgage,” he said.

“If you’re made redundant or suffer a drop in your income, there is immense pressure of having a mortgage and you either have to sell up or try and get a tenant and that’s not something people want to do with a home they’ve just bought.”

Mr Eldridge believes people are obsessed with buying homes because they think it’s a rite of passage.

You move out of home, get a proper job and buy your own home, it’s just one of those milestones in an adult’s life.

“People feel they have got to do this and there’s no other pathway,” Mr Eldridge said.

“People think they aren’t building up their nest egg in the world in terms of finances but there are other ways to build that up.”

He thinks people also worry they can’t properly raise a family in a house they are renting.

“People say they need the stability of owning a home but when it comes to retirement people end up shackled to huge houses,” he said.

University of Sydney property law lecturer John Eldridge has no desire to buy a house. Source: Supplied

So why are people so against renting?

Mr Eldridge thinks it’s because people don’t like the idea of being beholden to somebody else.

“People are under so much control already in their life and you don’t always have a lot of freedom and where you live is a very personal thing so I think people like to leave work and go home and have this place that is their castle,” he said.

“It’s probably overstating it when people say you don’t have control over your place if you’re a renter. You may move into your new place and at first is doesn’t feel like yours but after a few months you quickly forget about the existence of your land lord and it’s something you are only reminded of every couple of months when you have an inspection.”

Mr Eldridge said at the end of the day, money could be better invested in something that isn’t a property.

“I think it really depends on what sort of skills and knowledge you have and people might not like the idea of playing the sharemarket but every Australian has had a job in the last decade and superannuation is a low risk and a good way of building up some wealth.

“I’m not interested in buying in the short-term, I might change my mind but it’s not on the foreseeable horizon,” he said.