Key Points:

Potential homebuyers are choosing to remain long-term renters - freeing up their savings for less volatile investments.

Industry experts say even tenants who can afford a deposit and mortgage repayments are taking advantage of market conditions and enjoying a less stressful life.

Andrew King, of the Auckland Property Investors Association, said renting was "extremely good value" at the moment and believed the number of long-term tenants had been rising for at least 18 months.

King said maintenance, rates, and insurance cost landlords up to $10,000 a year, per property after tax - and that was $10,000 a tenant didn't have to pay.

"Renting is a very cost-effective thing do to," he said. "It's not even just the cost of the maintenance, you also don't have to do it, you can just ring the landlord."

Tenants also had the freedom that comes with flexibility. They only have to give three weeks' notice, while a landlord has to give 90 days, or 42 if they are selling. They also have the protection of the Tenancy Tribunal.

King said the doom and gloom surrounding the housing market had seen more rental properties become available, especially in the last month.

Finding properties weren't selling for the price they wanted, homeowners have been renting them out while the market corrected.

But King said the "slight oversupply" didn't mean you were likely to get a rental property on the cheap, especially in Auckland. Some landlords, facing rising costs, were putting up rents by as much as 15 per cent, forcing some tenants to move.

Property investment consultant Tanya Kwasza, of Auckland-based Catalyst 2, has been a long-term tenant and said it could be a better bet than saving for a deposit.

After returning to New Zealand from overseas, she invested her savings in other properties while still renting, holding off buying a home for herself until she was in her 40s.

"I was able to rent where I wanted to live, in an area I couldn't have otherwise afforded to live in, while also getting tax relief from my other properties and building up my portfolio."

Her business partner, Nikki Connors, said the idea that a freehold home provided financial security for later in life might be untrue.

"We have a lot of people who have paid off their mortgage coming to us at retirement age and they're officially on the New Zealand poverty line, the Government pension," said Connors.

"They face having to sell and downsize, or take out a reverse mortgage on the very house they have spent all those years paying off just to retain their lifestyle."

Connors knew an entrepreneur with several businesses who was renting a $4 million home off Auckland's pricey Paratai Drive. Although his rent was high, it was less costly than a $2 million mortgage and freed up funds to invest in his businesses and rental properties.

"It's something I have considered myself," said Connors. "I don't know why I own my own home when I could be renting a fabulous place. That [mortgage] money could be topping up two or three rental properties."

Tradition isn't the only thing dictating whether a person buys or rents.

John Grant, director of New Zealand business for GE Money Home Lending, said whether or not you aspired to owning a home was "a lifestyle choice these days".

"The attitude towards home ownership isn't the same for generations X and Y as it was in the baby boomers' time," said Grant.

But he said if you wanted to buy a home it was better to get on the ladder as soon as possible. "The longer you leave it, the harder it will be."

It was also important to be a highly-disciplined saver if you wanted to rent long-term and invest in shares rather than property.

"Property tends to be a lifetime asset you would be reluctant to sell just so you can go on a big holiday. But it's far easier to sell a few shares off."

Financial writer Mary Holm told the Herald on Sunday renters might be smart to sit on the fence "for a while, if not forever" as long as they saved in other ways. On the flipside, those who wanted their own home shouldn't let market worries affect their decision.

HAPPY TO BE MORTGAGE-FREE

Rachel Rae is a renter - and she's happy to stay that way.

The Auckland web developer has lived in rented accommodation for 15 years. Despite having a good income and the ability to get a mortgage, the thought of never owning her own home doesn't bother her.

The single 36-year-old shares a flat with her landlord in Herne Bay, Auckland. Rae loves to travel and she is disciplined enough to save a good chunk of her income for other investments.

"I prefer to have the availability of more savings," she said.

"If you own your own home, you can get in the situation where you have to come up with quite a lot of money in a short amount of time.

"I'd rather make other investments that don't require me to come up with $5-10,000 in maintenance every year."

Rae said she normally allowed her savings account to grow to between $10,000 and $15,000 before investing the money through her bank. "It's safe and easy, and the money can be made available if it's really needed."

She's lived in eight rental properties over 15 years and has never had a bad landlord.

In one place, the landlord decided to raise the rent by more than she thought reasonable, so she moved.

Another time the house she was living in was sold so she moved.

"If you have to move, you have to move... the only major disadvantage [of renting] for me is not having the ability to put in gardens."


RENTING VERSUS BUYING
RENTING - THE PROS:
* You may get a higher return on invested money.
* Greater flexibility with savings.
* Better savings diversification.
* Less responsibility.
* Can move easily and cheaply.
* It might be easier to live in the suburb you want.
* No maintenance worries.

RENTING - THE CONS:
* Can be booted out.
* No say over choice of decoration.
* More discipline needed in order to save money.
* Exposed to rent increases.

BUYING - THE PROS:
* Accumulate equity in property.
* Future retirement accommodation.
* Easier to borrow for business.
* You decide when you'll leave.
* Decorate and garden as you please.
* Pride of ownership.
* Security.
* Freedom to have pets.

BUYING - THE CONS
* Good credit rating needed.
* Home maintenance.
* More difficult and expensive to move.
* Inflexible savings.
Source: Get Rich Slow by finance writer Mary Holm