Introduction

Everyone needs a place they call home. If you buy, it is likely to be the most expensive thing you ever purchase. If you take out a mortgage or decide to rent rather than buy, the mortgage instalments or rent payments are likely to be among your largest monthly outgoings. Since putting a roof over one’s head accounts for a good deal of most households’ spending, it is important to make the most appropriate decisions about where to live, what kind of home to choose and whether to rent or buy it. Furthermore, in many countries, housing is seen not just as a place to live but as a store of wealth. This means decisions about housing are important at the household level in planning for long-term financial security but also create tension between those who hold housing wealth and others who cannot afford to buy.

In this free course, Rent or buy? The challenge of access to housing, you will explore a range of issues relating to housing financial decisions. In particular, you will consider four key questions:

• What are people’s motives in deciding whether to buy or rent?
• Are house prices too high – in other words, what is ‘affordability’ and how is it measured?
• If you buy, what are the total costs and some pitfalls to watch out for?
• What determines the level of house prices and makes them change?

Along the way, you will be introduced to two financial tools: a mortgage calculator, which can be used to compare mortgage costs; and a balance sheet analyser which assesses the strength of a household’s finances based on its assets (the things that it owns, like savings and property) and liabilities (the things that it owes, such as a mortgage and other debts). These tools can help you with decisions about housing, both in your study of this course and your own personal finances.

This OpenLearn course is an adapted extract from the Open University course DB125 You and your money .