Invest
The facts and falsehoods of ‘rent money is dead money’
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.

The facts and falsehoods of ‘rent money is dead money’
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’.”
About the author

About the author


Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more

Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more

Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more

Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more

Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more

Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more

Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more

Property
Poor wage growth could impede home price growth
With wages growth at record-low levels, a property expert has warned that continuing low and flat wages could impede home price growth. ...Read more

Property
Negotiating a lower interest rate on your property loan
The banks are customer hungry, meaning they’re willing to offer increased discounts to new customers and apply these discounts to existing customer loans, a mortgage broker has said. ...Read more

Property
How to determine the real value of a property
With various factors affecting market value and pricing, can one truly predict what buyers will pay for properties? ...Read more

Property
House prices tipped to soar 20% in 2 years: Westpac
House prices in Sydney are tipped to grow by 20 per cent over the next two years, and by 18 per cent in Melbourne, as a leading economist predicts strong economic growth following the rollout of the C...Read more

Property
5 tips to unearth the next property hotspots
A property expert has bullishly claimed that property hotspots are a “complete myth” that almost guarantees buyers will pay top dollar, and has instead urged buyers to seek out the “warm spots...Read more

Property
Top 10 inland rural towns to invest in
While it’s become apparent that regional housing markets have stolen the spotlight, having outpaced their capital city counterparts in 2020, new research has shown that inland rural towns have also ...Read more

Property
Where to buy under $300k
A positively geared property with high capital growth potential does not necessarily need to carry an astronomical price tag, an expert has said, with new market entrants able to land a home for under...Read more

Property
‘Great Australian dream’ of owning a home lives on amid COVID
Most Australian investors and home buyers were largely undeterred by the events of 2020, remaining eager to push through with their investment plans, a new survey has found. ...Read more