More than half of Sydney homebuyers would have been better off renting and investing elsewhere over the past 25 years, according to new research.
Economic analysis released by Ernst & Young on Tuesday suggests 60 per cent of those who bought a home in Sydney between 1992 and 2017 would have had better results if they’d maintained a leveraged ASX200 portfolio.
Using data across all of Sydney’s 43 Local Government Areas, EY compared homebuyers’ capital gains to those investing in a leveraged share portfolio, along with a savings plan and renting where they could afford to buy.
EY chief economist Jo Masters believes the analysis paves the way for a new conversation about alternative paths to build wealth beyond home ownership.
“It’s time to give up on the mindset that renting is dead money … with today’s property prices you could be better off renting somewhere affordable and investing the cash you’ve saved,” Ms Masters said.
“We shouldn’t be pushing an entire generation into unsustainable debt levels. We need to change the wealth creation narrative to explore options other than property.”
The suburbs where renters came out on top were North Sydney, Mosman and Leichardt – beating ownership 70 per cent of the time.
Home ownership in Marrickville, the CBD and Botany Bay produced better results for buyers – beating renting 67 per cent of the time.
Despite the analysis showing positives for renters, Ms Masters said tenancy law should be changed to make it a stable option with renters given more rights.
“The short-term nature of Sydney leases is a critical factor, where other global cities such as New York and Berlin offer broader tenant’s rights, and longer leases – making a rental property more like a home,” she said.
On Monday Deloitte said while Australians were becoming more conservative as house prices decline, people shouldn’t be too alarmed, largely because the price falls are biggest in the nation’s strongest economies of Sydney and Melbourne.
Deloitte said prices had risen so steeply in recent years that most people didn’t start to rely too deeply on their new found health either.