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Originally Posted by BengaliPagol
I'm speaking from the pov that a person doesn't have a house yet but is looking to either rent or buy one. People on this thread are talking from the perspective that buying is better cos at least you have an "asset".
But that is a wrong way to look at it because you are essentially living in the so called "asset" and people think "oh yeah If things go bad at least my house is an asset and I can sell and make money". And in also other circumstances when the price at which the person bought the house was low and they're living in the house and they know that the value of their house is now a lot, people also think "yeah imma make heaps of profit from selling my house", neglecting the fact that if they sell their house i.e. asset they wont have a place to live and they may think that "i can just buy another cheaper house" but then all the houses prices around their area would have also increased as well.
Therefore thinking a house as an "asset" which you live in, is not exactly the same as other types of assets such as shares where your day to day life and livelihood is not affected by you buying and selling shares.
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Think of it this way, if you continue to rent till you retire and lets say you dont have sufficient pension then you will have to find that money to rent a place until you die which could be for another 20 years. For most people the safer alternative is to move into their own house or apartment so that after retirement all you need to worry about is your living expenses. Plus land prices will continue to appreciate while you work towards it so if you buy the house knowing where the next city center is going to be then you will be able to sell the place and happily move to a cheaper and quiet neighborhood. Now if you are really disciplined and forward thinking, you could srart saving now for retirement and actually have enough money to rent a house as well as cover your living expenses for 20 years post retirement, but most of us arent that good and tend to blow our excess income on useless things. So for those folks forcing yourself into a mortgage situation actually forces you to keep that money aside and turn it into an asset which might have otherwise gone into a holiday trip to NZ or gadgets or UHD tvs etc.