Business, Know your finances, Online Magazine

Spending on a Roof

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Should you buy or rent?


The table below demonstrates the weight of selected divisions under the consumer basket.

.

Main Expenditure Division

Weight (%)

Food and Beverage

21.7

Housing, Water, Electricity, Fuel

20.5

Transport

10.4

Furnishing, Household Equipment, Maintenance

9.1

Other

38.3

.

Source: Saudi General Authority of Statistics, cost of living index, June 2016.

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Your housing expenditures come in second and fourth as a Saudi consumer, just after your basic instinct of eating. So when you are debating “buying versus renting” a house, we feel you. Buying a house merely depends on affordability, but there are other variables to consider.

.

Buying

Renting

The purchase value is not the last expense you will incur. You will undergo regular maintenance that you are financially responsible for.

.

No need to worry about maintenance and repairs since they are taken care of by the property landlords.

.

Provides capital appreciation. The normal scenario would be an increase of value over time. Occasionally, property value might fall due to economic circumstances. Accordingly think location, location, location before buying.

,

No capital building. Your rental payments are economically irreversible. However, no exposure to the real estate market and no anxiety on price volatility.

.

Housing security.

,

Easier relocation but no housing security.

.

.

Some quantitative calculations are used for further assessment. It is important to never regret any decision you made because one market rule to keep in mind is uncertainty. If anything goes wrong, it is not actually your fault; it is just an economic cycle.

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