The majority of Sydneysiders believe renting is a waste of cash, but research shows that property owners in popular suburbs may have been better off investing in other markets.
According to research from EY, two out of three Sydney residents still believe that renting is a waste of money. This is despite it taking an average of nine years of saving to buy a home or seven years for an apartment in Sydney. These time frames are compounded by tougher access to finance in recent years.
Big buys, big losses
EY’s research showed that 62 per cent of people would be better off investing the capital in other assets and paying rent over the period of 1994 to 2017, rather than owning a home and having the applicable bills with home ownership.
For example, in the Sydney suburbs of North Sydney, Mosman and Leichhardt, renters beat owners 70 per cent of the time.
Quiet achievers
On the other side of the equation, those who bought in Marrickville, the CBD and Botany Bay beat those who are renting 67 per cent of the time over the same period.
The biggest gain came from home buyers in Woollahra who bought in 2007 and sold in 2017, as they would yield nearly $303,771 ahead of renters.
All things considered
These findings are not necessarily an absolute indication of whether renting or buying is the better option. Rather, they indicate that the popular adage, “rent money is dead money”, is not universally applicable.
“Ultimately, renting does not have to be an inferior housing choice. But policy settings, banking practices and social attitudes currently make ownership seem a more desirable option for people,” EY said.
“That bias has not only created anxiety amongst those unable to put up the growing starting capital to buy a house, but also a level of leverage in the household sector that could impact future financial stability in Australia, with the rush towards ownership heavily contributing to household indebtedness rising to nearly 200 per cent of disposable income.
“Supporting households to purchase, where renting might provide similar or better long-term wealth creation outcomes, without the accompanying mortgage stress, is something governments and banks can help change the narrative on.
“To do so, the conversation needs to shift from ‘how can we make homes more affordable to purchase’, to ‘how can we make more versions of housing arrangements affordable, appropriate and stable’.”
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