While scarcity and affordability is a major problem for many young people considering buying their first home, there remain many reasons why you should strive to own your own home.
1. Inflationary Asset
Although inflation is at cycle lows right now, it will return. It is a powerful economic force that you can benefit from by owning inflationary assets, like property. The flip side is continually facing rent increases, which can, as Dubliners know full well, outstrip earnings, eroding renters’ standard of living.
2. Savings Habit
A mortgage can in certain circumstances become a ball and chain but it does ingrain the savings habit by forcing us to pay off a certain amount every month.
Yes this is a double-edged sword for sure but over the long run it allows us to benefit from the cheapest form of debt, particularly in bull markets.
4. Buy And Hold
This is perhaps one instance where illiquidity and high trading costs can be a good thing. While obviously a negative if we can’t sell when we want to, we generally hold on to our home longer than any other asset, meaning we avoid the trading behaviour than can destroy returns.
5. Tax Free
The lack of a 33% tax on capital gains is a huge incentive for us to buy our own homes. No other asset class is given such preferential treatment so it makes sense to take advantage of this tax break if at all possible.
6. Home Sweet Home
Last but not least, there are all the ‘soft factors’ that add up to a strong vote for buying versus renting. The value of being able to design your interiors to suit you and your family (not the landlord) and never having to move again is, well, priceless.