Is it worth buying a house for the short-term?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on June 9th, 2023       

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With so much pressure from banks and advertisers – buy now! Lock in interest rates! Stop renting! – You might wonder if buying a house and keeping it for a short-term is a good idea. You might be living in the outer suburbs and you think you could move somewhere closer to the city or into something bigger relatively quickly. By short-term, we mean for one to three years. But is it a good idea?

You’ll pay a bunch of fees you can’t get back

If you buy a home, you’ll likely need to take out a home loan. You’ll have to pay a fees and charges when establishing a home loan and those are fees you aren’t able to reclaim (unless you’re buying for business purposes.) This is also true with some utility or telecommunications setup fees. You will only recoup those costs over time – more than three years – when your house’s price appreciates.

You won’t build up much equity

In the space of a year or two, you won’t build up much equity in your home. If you’re looking to extract the equity in your home, you may not have enough. You can use equity to purchase a more expensive house or finance an investment property. If you do not have enough equity, it may not give you favourable rates, if they approve your equity loan in the first place.

If the market shifts quickly, it might not recover before you sell

If you remember when the Global Financial Crisis and credit crunch hit in 2007, it occurred almost overnight. Interest rates fell and economies scrambled to shore up weaknesses in the economy. In the USA, many people woke up to find their homes were only worth half as much as it was the day before. If the housing market takes a dive, holding on to a house for a year or two might not be enough time to weather the storm.

Home ownership is a marathon, not a sprint

Home ownership is supposed to be a long-term investment over decades, not months or years. It may take at least three to five years just to break even with enough accumulated equity and appreciation. You might want to renovate your home in that time, which can disrupt living arrangements and take years in and of themselves. That said, some home renovations don’t improve your sale price beyond what you’ve sunk into the renovations straight away – that may take a few years to make a significant return. With houses, it makes sense to ease into changes rather than make sharp turns every which way.

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