An NPV Analysis of Buying versus Renting for Prospective Australian First Home Buyers

Abstract

This paper explores buying versus renting as an investment decision for a prospective Australian first home buyer, by comparing the net present values of buying and renting. An ex‐post analysis for overlapping 10‐year periods from 1983 to 2015 for Australia's eight capital cities suggests that buying was financially more favourable than renting over most of the study period. Renting was favourable in some capital cities for the decade from 1983, but buying was clearly favourable from the early 1990s to early 2000s in all capital cities. An ex‐ante analysis suggests that buying is currently favourable in Sydney, Melbourne, Perth and Darwin.

Real estate rental market: a 10-year bibliometric-based review

“…Some scholars discovered that the development of the housing rental market would help to reduce the inequality between income and house prices (Zhang et al, 2016). On the topic of home ownership, some scholars presented that buying or renting, as an investment decision by households, has long-term consequences on their financial well-being (Beaubrun-Diant & Maury, 2016;Crowley & Li, 2016;Tabner, 2016). Each cluster involves citing articles and cited references.…”

Stamping out Stamp Duty: Property or Consumption Taxes?

“…House prices and stamp duty. Data on the median house prices and stamp duty rates in capital cities of Australian states across 2001-2015 are provided by Crowley and Li (2016).…”