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If owning your own home seems out of reach, you are not alone.
New data shows Generation Y - those younger than 28 - are spending their earnings on travel and shopping instead of saving for a house deposit.
Read more:
• Generation Y locked out of homes: report
• Rise of the 30-year home loans
Owning your own home is the "Kiwi dream," but renting may be a better option. Here are 10 reasons why renting is better than buying.
Yes, houses usually appreciate. But so do other assets and investments. If you compare the value of a house now, to what it was bought for 20 years ago, it may seem impressive. But other investments - such as investing in a business - could have also appreciated because of inflation.
Renters will have far less to worry about than homeowners if the real estate market does crash. Those who bought property to fund their retirement, for example, will be very worried whereas you will just keep paying rent as you always have.
Well, if you can afford a house without a mortgage that's great for you. But most of us can't, and many of us are opting for 25 - 30 year loans. That's a shedload of interest. For example, if you opted for a $500,000 home and borrowed 80 per cent, you would end up paying $862,938 ($462,938 in interest alone) over 30 years, based on an interest rate of 6 per cent. (According to sorted.org.nz)
Purchasing a house is a much bigger commitment than signing a 6 month or 1 year lease. Once your lease is up, you can choose to move or stay (if the landlord agrees). If you've bought, and decide to move, you are subject to the housing market.
Just because you're approved for a big mortgage, doesn't mean you should spend everything the bank is willing to give you. Though many end up borrowing more than what they can actually afford.
Renting gives you the flexibility to live in the area you want. Many people like living in urban areas, close to amenities for work and socialising, but purchasing in these areas may be unaffordable.
For example, if you have just graduated as a pharmacist and are thinking of launching a business, you will need your cash for that - not tied into a property.
I remember when my husband and I rented our first flat and the oven packed up. One call to the landlord, and we got a brand new one without any hassle. The same cannot be said now that we own a house.
Having a mortgage can increase your debt-to-income ratio, which may make it more difficult to borrow for something else. Even if you pay more in rent than you would to pay off a mortgage, on paper rent is an expense, not a debt.
There's the old adage that renting means you're paying off someone else's house instead of your own. However, renting may be a lot cheaper than paying off a mortgage. Those savings could be put away to increase your deposit and decrease your loan amount when you do buy a property.
The mortgage is just the start of it.