Buying real estate is a large financial decision, so why do so many people do it?

A common reason people purchase their own home is to improve their long-term security and financial position. Over time your mortgage repayments effectively become a forced savings scheme. As you pay off the principal of the mortgage, you build more capital, which can be realised once you have sold the property.

When you own your own property, you will incur some ongoing cost, for example rates and maintenance, that you wouldn't incur if you were renting, but this is normally outweighed by the value of the tangible asset and equity value that you get in return for the money invested.

Purchasing real estate is a strong long-term investment. Residential properties appreciate at about 10 percent per year (average) in New Zealand, which means that if you hold a property for some years it's capital value should increase. This makes residential real estate a great low-risk investment.

Owning your own property also gives you long-term security about where you live. You do not need to rely on anyone else to provide your security for you; you have it and control it.

Purchasing your own property gives you the right to do with it what you please. It gives you the opportunity to alter the home to reflect you. For example, you can re-paint, re-carpet, and re-wallpaper, all in styles and colours that you like, not the styles and colours of the landlord. It is the changing of these aspects that often makes a house, your home.

Home ownership is a big decision which is right for some people and not necessary for others. You should assess your priorities and decide from there whether renting or buying is right for you.

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