The rent vs. buy debate is an old one and for good reason. There has never been a simple answer, with pros and cons to both as well as constantly shifting economic climates affecting the financial implications.
Many would prefer to buy. However, given the difficulty of entering the current property market, that option simply isn’t always available. The prevailing belief is that money spent on rent is a waste while money put towards owned property is an investment.
A definitive answer?
A study coming out of the University of Melbourne conducted by economists Dominic Crowley and Shuyun May Li may have discovered the definitive answer at least for the time being.
In their research paper, the pair observed a deep desire within Australian culture to own a home, with renting often regarded as the less appealing choice. To find the closest thing to a ‘true’ answer, the two economists were able to compare the lucrativity of buying vs. renting from 1983 to 2005.
Renting vs. buying: The verdict
After the research had been conducted, the conclusion was that buying is the better option in most situations.
They found that buying was more lucrative than renting in Australia’s biggest cities across the time period studied. Sydney, Melbourne, Perth and Darwin all favoured buyers, with all other cities showing no clear winner.
So is the debate over?
The study showed compelling evidence of buying being the better option in most Australian cities in the past.
The price of property has increased by more than 300% since 1983 a much higher rate of expanse than average income.
The rent vs. buy debate will never end, and the answer will always be subject to change. For the time being however, buying seems to be the superior option.
Mortgage House
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.
