Property experts weigh into buying versus renting debate

That was based on the assumption that real house prices grow at 2.4 per cent per annum, which has been the annual average rate since 1955.

The Reserve Bank paper also found that owning is the better option if house prices grow at least 2.9 per cent per year.

However, property industry experts have noted that those national estimates could fall below those being achieved in some cities and postcodes.

Domain Group senior economist Andrew Wilson said the predictions came from “unknown sources” and were based on a range of preconditions.

“The point is, where would all these people live if we had a big surge towards rentals from buying?” he told The Adviser’s sister title, Residential Property Manager.

“Nearly half of our market is driven by investors and most of our rental stock comes from private investors, so if there was no real house price growth there would be no incentive for investors to be purchasing property.

“So there would be a shortage of rental properties and then that would force up rents, and then it would be cheaper to buy than rent,” he added.

RP Data senior analyst Cameron Kusher said many suburbs were likely to have beaten the Reserve Bank’s estimate.

“Realistically, most suburbs in Melbourne and Sydney have grown in excess of the [2.9 per cent] projection,” Mr Kusher said.

“Over the last 15 to 20 years we have definitely seen growth in excess of inflation most of the time.”

[Related: RBA tips another year of record-low interest rates]