According to a research paper published by the Reserve Bank of Australia, house prices would have to continue to rise at the same rate as they had for the past six decades for owners to be as well off as renters.
“If house price growth were to be slower than the historical average, as some forecasters predict, then the average home buyer would be financially better off renting,” the paper says.
The RBA analysed a range of costs involved in owning a house but not applicable to renters, such as council rates, interest rates and purchase price.
The research of the central bank focused on owner-occupied purchases. Investors in housing may be better off because of tax reasons.
It calculated that the annual rate at which the real (inflation-adjusted) price of a house must rise for an owner to keep pace with a renter financially was just below 2.5 per cent.
However if the 1.7 per cent rate experienced over the past 10 years was used, owning only beat renting over a period longer than 30 years.
Source: Fairfax Media