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RBA Claims It’s Better To Rent Than Buy


It’s the perennial property debate – will you be financially better off buying a house rather than renting one?

In a recently released report, the Reserve Bank of Australia (RBA) says that Melbourne tenants have the upper hand financially; at least for now.

The study Is Housing Overvalued? argues that costs applicable only to homeowners, such as land rates, purchase price and interest rates, makes renting the more financially sound option.

In order for buyers to catch up to renters, house prices would need to rise by almost 2.5% per annum. The RBA says recent figures indicate that house prices are forecast to either slow or decline over the coming few years, meaning that in the short-term at least, renters will continue to be better off.

The study’s authors, however, were quick to point out that the report only applies to owner-occupiers, and that property investors usually find themselves in a better place financially due to tax breaks.

You can read the full report here:http://www.rba.gov.au/publications/rdp/2014/2014-06.html

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