Australian property market experts have highlighted holes in the recent Reserve Bank of Australia (RBA) report that pointed to renting being the better option over buying.
On a national front, the RBA has calculated home prices around Australia have risen an estimated 2.4 per cent each year, after adjustments for inflation and ownership costs, over the past 60 years — and that house prices would need to gain 2.9 per cent per year to provide a better option than renting.
However, property industry experts have noted the RBA’s estimates, which account for the national housing market, could fall below those being achieved in some cities and postcodes.
Domain Group senior economist Dr Andrew Wilson said the predictions came from “unknown sources” and were an “if” statement.
“There are a lot of holes in the particulars, I guess preconditions, for this research,” he told Residential Property Manager.
“The point is, where would all these people live if we had a big surge towards rentals from buying — 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 RBA’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.”