A national accounting firm has slammed a recent research discussion paper by the Reserve Bank for setting a "dangerous precedent" for many Australians who remain undecided about home ownership.
The RBA commissioned the report, Is housing overvalued?, which examines whether it costs more to own a home or to rent.
But accountants Chan & Naylor have taken issue with its findings.
The RBA argues that if property prices continue on a 2.4 per cent long-term trajectory, the cost of buying a house would be the same as renting, and if housing growth slows to less than two per cent then homebuyers would be financially better off paying rent instead of a mortgage and other costs related to home ownership.
“On paper these figures may seem to make stark economic sense, but the property market, like any other, is cyclical and therefore undergoes peaks and troughs,” Chan & Naylor managing director Ken Raiss said.
“The other significant factor is that not all properties are created equal.
“The purchase of a property, whether it is for owner occupation or investment, must be a business rather than emotional process.
“Purchasers must strive to buy property that will outperform the average and in so doing take heed in the old adage ‘Lies, damned lies, and statistics’.
"This is not as difficult as it may appear if purchasers look at buying property that is below intrinsic value, is in different higher capital growth locations and is capable of having improvements added," Mr Raiss said.
“Spending time on research should take purchasers out of buying an average result.
“If you agree with the notion that property prices will fail to rise by 2.4 per cent over the long term, then fair enough, enjoy being a tenant for the rest of your life.
“However, unlikely scenarios aside, there are a number of other very practical and important reasons why all Australians should be encouraged to get on the property ladder if they are able to do so.”
Home ownership, like any form of wealth creation, is all about having a purpose and focused determination, Mr Raiss said.
“Whilst many Australians have an unrealistic ‘lottery win’ view of their future financial independence, it is possible to win your personal lottery with property if you do the research and just have the patience for it,” he said, adding that the basic fundamentals of property ownership are buy early, buy right and hold on to your faith in your investment and financial destiny.