Why you should reconsider buying real estate

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Real estate may not be the ideal investment choice.

For some, acquiring real estate is a sign of financial stability. Others consider it an excellent investment, thanks to its value appreciation. However, here are some facts that you need to consider before buying real estate.

1. Appreciation is a consequence of inflation

Appreciation is caused by inflation. This doesn’t mean that real estate doesn’t truly increase in value.

However, it’s important to differentiate between the increase in selling price that is due to added value such as new amenities in the area and the increase in price that merely reflects inflation.

2. Consequences of taking a mortgage

Credit rating depends largely on your ability to pay in full and on time. If you accept a mortgage and are unable to pay it back, this will reflect on your credit rating which may lead to difficulties in acquiring loans in the future.

Bank mortgages have advantages as well as disadvantages and they must be considered before choosing a home loan.

3. Renting can be a better option

Some jobs require you to be constantly on the move to other cities, other states or even other countries on a regular basis.

If you’re in this type of a job, the benefits of owning real estate as opposed to merely renting a property will blur out.

It is currently cheaper to rent than to buy a home. Square Foot Research has found that if prices stay the same or appreciate less than 2% in the following years, renting could prove to be a better option than buying residential property.

4. Houses are expensive to maintain

Whether you’re buying the house for your personal use or with the intention to rent it out, large sums of money must be invested in it.

The price of the house and mortgage you will undertake aren’t the only costs that need to be taken into consideration.

Repair and maintenance will be constant costs for as long as the property is yours. Furnishing and refurbishing every few years must also be taken care of.

This article first appeared in The New Savvy.

The New Savvy is Asia’s leading financial, investment and career platform for women. Our bold vision is to empower 100 million women to achieve financial happiness. We deliver high-quality content through conferences, e-learning platforms, personal finance apps and e-commerce stores.